Technically Speaking

Weekly Analysis: Livestock Markets

Live Cattle: The December contract closed $0.75 higher at $166.80. December contract has been consolidating recently, holding below its high of $170.00 but above its 4-week low of $161.80. The market remains sharply overbought, and a weakening December to February futures spread (indicating a less bullish commercial outlook) could lead to at least a minor (short-term) downtrend. However, recent history has shown the market to frequently ignore possible bearish technical signals.

Feeder Cattle: The January contract closed $3.975 higher at $232.45. The secondary (intermediate-term) trend is sideways as the contract holds above its 4-week low of $225.75 and below its 4-week high of $239.30. Weekly stochastics are also neutral, holding near the overbought level of 80% with the last turn signal a bearish crossover the week of October 6.

Lean hogs: The December contract closed $0.75 higher at $88.775. Technical indicators continue to show the secondary (intermediate-term) trend is down. However, the December contract posted an inside range last week hinting at a possible consolidation phase. Support remains near the recent low of $84.275, roughly the 67% retracement level of the uptrend from $74.00 through the high of $105.50.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.29, down 7 cents for the week. Seasonally the cash corn market tends to trend down through November. Last Friday's settlement leaves open the possibility of a minor (short-term) island top on its weekly chart if the market loses more than 5 cents Monday. Nevertheless, the secondary (intermediate-term) and major (long-term) trends remain up. Initial resistance remains at $3.50. Support is at $3.00.

Soybean meal: The December contract closed $1.40 higher last week at $390.40. The secondary (intermediate-term) trend remains up, with next resistance at the previous high of $411.40. Weekly stochastics are approaching the overbought level of 80% but remain bullish. The market's inverted forward curve continues to indicate a bullish view of supply and demand, though both the December to January and January to March spreads did weaken last week.

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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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