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December Lean Hogs gap opened lower and traded down to the session low at 79.80. It reversed course and Surged to the high at 81.175. The rally to the high closed the gap from the open and the price action after the gap close turned lower again and broke down to close in the middle of the range at 80.425. It formed a Doji candlestick indicating indecision in the market. The weakness from the open, in my opinion, came after a weak one-day cutout on Thursday. The reversal to the high came as the morning cutout surged on a strong belly. I believe the pullback into the close was simply, traders not believing the cutout would be able to hold the strength in the belly. The one-day cutout did come down on the afternoon report as the belly did pull back but, it was able to hold most of its gains. The breakdown to the low stopped right at support at 79.80. There is also a confluence of support nearby with the rising 21-DMA at 80.05 and the declining 100-DMA at 80.025. Settlement was a tick below the key level at 80.45. The market is looking at a potential topping in the cash markets and the Doji candlestick is in my opinion traders looking for more information on the cash markets. The Lean Hog Index is expected to be lower on Monday so, with the cutout higher what will traders do? We’ll see!… Slaughter this week was mixed with it above last year’s slaughter but lower than last week. Are the seasonals coming into play? If price breaks down from settlement, it could re-test support at 79.80. Support then comes in at 78.80. If price can hold settlement, it could test resistance at 81.70.
The Pork Cutout Index decreased and is at 101.71 as of 11/07/2024.
The Lean Hog Index increased and is at 90.61 as of 11/06/2024.
Estimated Slaughter for Friday is 485,000, which is above last week’s 484,000 and last year’s 452,255. Saturday slaughter is expected to be 168,000, which is below last week’s 219,000 and last year’s 190,946. The estimated total for the week (so far) is 2,605,000, which is below last week’s 2,653,000 and above last year’s 2,578,378.
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
Direct: 312.957.4163
888.391.7894
Fax: 312.256.0109
bdicostanzo@walshtrading.com
www.walshtrading.com
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