Technically Speaking

Weekly Analysis: Livestock Markets

Live Cattle: The February contract closed $0.875 higher at $172.15 last week after establishing a new high of $172.75. While the secondary (intermediate-term) trend remains up, the market is sharply overbought with stochastics approaching upper 90% levels. However, noncommercial traders continue to buy with Friday's CFTC Commitments of Traders report showing this group adding 6,917 contracts to their net-long futures holdings; increasing their long futures by 6,080 contracts while reducing their short futures by 837 contracts.

Feeder Cattle: The January contract closed $0.225 higher at $236.35 last week. Its inability to move to a new high beyond the previous $239.20 leaves Jan feeders vulnerable to increased selling interest. Friday's CFTC Commitments of Traders report showed noncommercial traders reduced their net-long futures position by 513 contracts by adding 175 long and 688 short futures contracts. Weekly stochastics remain above the overbought level of 80%.

Lean hogs: The February contract closed $2.30 lower at $90.45 last week. The secondary (intermediate-term) trend remains sideways with resistance between $91.60 and $94.40, prices that mark the 50% and 67% retracement levels of the sell-off from $99.925 through the low of $83.30. Support remains near $86.50, the 50% retracement level of the previous uptrend from $72.95 through the $99.925 high. However, if the contract rejoins its secondary downtrend another test of the 61.8% retracement level near $83.25 is possible.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.41, down 4 cents for the week. Despite the lower weekly close, the secondary (intermediate-term) trend remains up. The NCI.X continues to hold above support at $3.27, a price that marks the 33% retracement level of the initial rally from the low of $2.81 through the recent high of $3.33. Resistance remains at $3.50, the 33% retracement level of the previous secondary downtrend from $4.86 through the $2.81 low. Given the bearishness of the carry in the December to May forward curve, it could be difficult for the NCI.X to push much past this resistance level.

Soybean meal: The December contract closed $1.50 lower last week at $378.40. The secondary (intermediate-term) trend looks to have turned sideways with resistance at the recent high of $417.60 and support between $376.80 and $370.80. These prices mark the 33% and 38.2% retracement levels of the uptrend from $295.10 through the $417.60 high. While the inverted forward curve continues to show a bullish commercial outlook, both the December to January and January to March spreads have established downtrends (weakening inverses) recently.

Last Friday's CFTC Commitments of Traders were report showed positions as of Tuesday, November 18.

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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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SCOTT HENDRICKSON
11/25/2014 | 3:08 PM CST
Darrin, Wondering the relationship of USD and Canadian dollar. Back in 90's when the USD was strong and at a premium to Canadian dollar. Their were many hogs and cattle coming down to US. What are your thoughts currently and is the Canadian dollar rising along with USD this time.