Technically Speaking

Weekly Analysis: Livestock Markets

Source: DTN ProphetX

Live Cattle: The December contract closed $3.775 higher last week. The secondary (intermediate-term) trend remains up as the contract posted a new high of $167.675. Weekly stochastics continue to show the market is overbought, but this situation has been in effect for the most part of the last year. The pattern on the weekly chart continues to show a possible 5-point top, though how high the contract could extend its rally, driven by continued commercial buying, is unknown.

Feeder Cattle: The November contract closed $9.375 higher last week. The secondary (intermediate-term) trend remains up, with the November contract posting a new high of $242.475 last week. Strong support at the end of last week could lead to follow-through buying this coming week. The contract still looks to be in the process of establishing a 5-point top as trade volume continues to increase.

Lean hogs: The December contract closed $1.45 lower last week. The minor (short-term) trend is sideways, with support near $91.65 then $89.175. The secondary (intermediate-term) trend remains down with resistance at $98.45.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $2.84, down 5 cents for the week. While the secondary (intermediate-term) and major (long-term) trends remain down, the cash market's 5-year and 10-year seasonal indexes show the low close for the marketing year tend to occur with last Friday's settlement. National average basis (versus the September 2015 futures contract) of 77 cents under is below the 5-year low for last week of 68 cents under, and near the weakest basis for any week over the last 5-years of 82 cents under.

Soybean meal: The December contract closed $2.30 lower last week. The secondary (intermediate-term) trend remains down. Major (long-term) support is at $274.80, the low from December 2011. Fundamentally the market remains bullish with the forward curve (series of futures spreads) from October 2014 through March 2015 still inverted. However, this price relationship continues to weaken.

Last Friday's CFTC Commitments of Traders were report showed positions as of Tuesday, September 30.

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Commodity trading is very complicated and the risk of loss is substantial. The author does not engage in any commodity trading activity for his own account or for others. The information provided is general, and is NOT a substitute for your own independent business judgment or the advice of a registered Commodity Trading Adviser.

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