Cash Analysis: The strength in the wholesale sector is probably the most important ingredient to watch over the next few weeks. The supply of hogs is rising as they should on a seasonal basis, albeit maybe not quite as fast as anticipated. And the marketing/slaughter weights are not going up as one would anticipate, especially with relatively cheap feed inputs. But recently, the #2 cutout popped to a new high, paving the way to move even higher. Part of the influence may be the low price of pork relative to beef, keeping retailers positioned to push pork over beef because of price. In the short term though, the shift may turn away from pork to beef heading into the last summer holiday. But after that, when retailers gear up for the push to October, prices could move even higher, with a move close to $100 not out of the question. And with packers making money slaughtering hogs, it would suggest their prices could hold firm, if not move even higher before turning down into the winter low, a low we still believe could be as low as $60. But if wholesale pork holds up, the base price for hogs could still see $90 first.
Tech Comment: October’s strength to start the week reinforced the potential of seeing it move higher. At the moment, it is positioned to test the last high at $67.70, and potentially important resistance at $68.85. If it gets over that, look for it to attempt a move to the summer high at $74.45. At this time, $62.00 stands as the key support. The February contract held support near $65.00 last week, but needs to close over $67.50 to establish potential to $69.00 again. But a close over that puts it in position to move to the summer $73.00 high. For now, $65.00 has been traced out as an important support zone.
Live/wholesale prices: Eastern Cornbelt: nc, Western Cornbelt: $76.79, -0.44, Wholesale cutout: $89.57, +0.21.
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