Hogs Consolidate, By Ben DiCostanzo Senior Market Strategist Walsh Trading, Inc.

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December Lean Hogs opened lower at the high of the day (81.95). It traded down to the session low at 81.00 and the consolidated the rest of the session to settle near the low at 81.20. Hogs traded in a tight range on Thursday, forming an inside candlestick as its range was within the trading range of Wednesday’s. Traders are starting to get a little wary of the strength we’ve seen in the futures and cash markets. The slaughter numbers we’ve seen recently has indicated a tightness in supply, in my opinion, driving cutouts and cash prices higher. Funds have been buyers in the futures creating a large long position. But cutouts are stalling and with the large long position already established in the futures, a turnaround in the cash market could lead to a strong pullback in the futures price as funds attempt to liquidate positions. We are entering a strong time period for slaughter and so far, this week, slaughter is above last year. If this continues on Friday, assumptions could be made that the numbers will increase as we move forward and put pressure on cash. This could lead to a further disruption in the December futures as traders move out of their longs. Export sales were disappointing as there were huge reductions in sales leading to a 14,700 MT decrease in sales. This is a marketing year low. This is also lending some angst as I am not sure of the reasons for the cancellations and this was the second time in the last 3 weeks that we have had major reductions in sales. This could impact cutouts going forward. We’ll see!… With the weak close on Thursday, traders may already be jumping the gun and liquidating some longs. If price breaks down from settlement, it could test support at 80.45. Support then comes in at the declining 100-DMA now at 80.175. If price can hold settlement, it could revisit the Thursday high. Resistance then comes in at the flattening 8-DMA now at 82.825.

The Pork Cutout Index Ticked higher and is at 102.90 as of 11/06/2024.

The Lean Hog Index increased and is at 90.24 as of 11/05/2024.

Estimated Slaughter for Thursday is 481,000, which is below last week’s 486,000 and above last year’s 468,316. The estimated total for the week (so far) is 1,946,000, which is below last week’s 1,950,000 and above last year’s 1,935,177.

**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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