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February Lean Hogs opened higher with a gap and rallied to the session high at 84.625. However, it reversed course, breaking down through the rest of the session to reach a low of 83.50, before settling near the low at 83.625.
The Wednesday cutout jumped higher, sparking early enthusiasm among traders and driving the price to its high. However, continued profit-taking pressed the market lower throughout the session.
Traders, expecting an easing of cash and cutout prices in the near term, have been surprised by the cash market’s ability to hold firm. This resilience has slowed price action, as traders, wary of the cash market’s strength, proceed cautiously while seeking profits before year-end.
The expectation remains for the cash market to soften. If the cash market begins to falter, liquidation could accelerate, and bears may start to build short positions, potentially pressuring futures prices even further.
Exports continue to underperform as the year draws to a close, and consumer demand is expected to weaken heading into the holidays, with a shift in focus toward beef.
Technical Analysis
Prices are consolidating within the December 16th trading range, which remains the key for determining the next market move.
- Support Levels:
- First support at 83.325
- Additional support at the rising 50-DMA now at 82.575
- Resistance Levels:
- First resistance at the declining 8-DMA now at 84.15
- Additional resistance at 85.325
Market Indicators
- Pork Cutout Index: Increased to 94.70 as of December 18, 2024.
- Lean Hog Index: Increased to 84.17 as of December 17, 2024.
- Estimated Slaughter: Monday’s estimated slaughter was 487,000, slightly below last week’s 489,000, but above last year’s 479,223.
Outlook
The cash market’s strength has tempered aggressive selling, but the consolidation within the December 16th range will determine the next direction for February Lean Hogs. A breakdown below settlement could test key support levels, while holding settlement could lead to a test of resistance. Traders remain cautious as year-end approaches and market dynamics continue to evolve.
Stay tuned for further updates and analysis.
Call me for a free consultation for a marketing plan regarding your livestock needs.
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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