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December Lean Hogs opened higher and rallied to the session high at 82.20. The rally stalled just below resistance at the declining 8-DMA now at 82.20, turning lower and breaking down to the session low at 80.875. A late day rally took price higher and it settled near the high at 81.775. Settlement was just above the key level at 81.70, which helps the bulls’ case, in my opinion. The futures market showed some resolve on Monday after Friday’s strong rally in the cutout. Monday’s morning cutout held up better than expected and traders narrowed the deficit futures hold to the Lean Hog Index. Futures are still trading at a steep discount to the index as traders expect the index to pull back going forward. The index is starting to work lower and the cutouts dipped on Monday, which could put some pressure on the Cutout index. This could put some pressure on futures if funds, which have strong long positions, decide to take some off the table. We also have a strengthening US Dollar, and the effects that may have on our important exports going forward. This also could put pressure on the cutout in order to keep sales strong. If sales stay strong with a strong Dollar, then watch out. We’ll see!… Slaughter this week was mixed with it above last year’s slaughter but lower than last week. Will the seasonals come into play or do we have lighter numbers than expected? If price breaks down from 81.70, it could test support at 80.45. Support then comes in at 79.80. If price can hold settlement, it could re-test resistance at the declining 8-DMA. Resistance then comes in at 83.325.
The Pork Cutout Index decreased and is at 101.45 as of 11/08/2024.
The Lean Hog Index decreased and is at 90.43 as of 11/07/2024.
Estimated Slaughter for Monday is 458,000, which is below last week’s 489,000 and last year’s 473,100.
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
Direct: 312.957.4163
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bdicostanzo@walshtrading.com
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