Technically Speaking

Weekly Analysis: Livestock Markets

Live Cattle: The February contract closed $2.700 lower at $162.15 last week after. The contract moved below last week's low, the previous four-week low, of $164.425 extending the recently established (week of November 24) secondary (intermediate-term) downtrend. That same week saw weekly stochastics establish a bearish crossover, also indicating the secondary trend has turned down. Initial support is pegged near $158.15, the 33% retracement level of the previous uptrend from the contract low of $128.85 through the recent contract high of $172.75.

Feeder Cattle: The January contract closed $9.275 lower at $225.60 last week. The secondary (intermediate-term) trend remains down with weekly stochastics bearish and the futures contract moving below support $225.75. Initial support is pegged near $215.35, a price that marks the 33% retracement level of the uptrend from the contract low of $167.40 through the contract high of $239.30, though stronger support is seen at the 50% retracement level of $203.35.

Lean hogs: The February contract closed $2.375 lower at $83.25 last week. The secondary (intermediate-term) trend remains down as the futures contract tests support near $83.25. This price marks the 61.8% retracement level of the uptrend from the contract low of $72.95 through the contract high of $99.925. However with weekly stochastics still bearish, indicating a possible extension of the secondary downtrend, the February contract could look to test the 67% retracement level near $88.95 in the near future.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.72, up 12 cents for the week. Despite weekly stochastics showing the cash market in an overbought situation, the secondary (intermediate-term) trend remains up. The NCIX closed at its weekly high, with the next target $3.84. This price marks the 50% retracement level of the previous secondary downtrend from $4.86 through the low of $2.81. The commercial side of the market continues to grow more bullish with national average basis holding steady at 35 cents under last week while the nearby March to May futures spread saw its carry weaken slightly to 8 1/4 cents. This is roughly 67% of calculated full cost of carry, a slightly bearish level.

Soybean meal: The January contract closed $0.60 higher last week at $367.00. The secondary (intermediate-term) trend remains sideways with the January contract testing resistance between $365.80 and $371.50. These prices mark the 61.8% and 67% retracement levels of the previous secondary downtrend from $410.30 through the low of $293.70. Weekly stochastics are neutral, confirming the sideways trend. The January to March futures spread remains inverted, though its downtrend indicates a less bullish commercial outlook. Initial support is between $363.90 and $358.70.

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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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