Technically Speaking

Live Cattle: The February contract closed $2.075 lower at $160.10 last week after. The secondary (intermediate-term) trend remains down. The February contract continues to test support near $158.125, a price that marks the 33% retracement of the previous uptrend from its contract low of $128.85 through its contract high of $172.75. However, given the continued bearish weekly stochastics Feb live cattle could test the 50% retracement level of $150.80. Friday's CFTC Commitments of Traders report showed a continued reduction of the noncommercial net-long futures position by 10,095 contracts, with longs decreased by 8,515 contracts and shorts increased by 1,580 contracts.

Feeder Cattle: The January contract closed $5.45 lower at $220.15 last week, leaving a bearish gap between its posted high of $223.60 and the previous week's low of $225.60. The secondary (intermediate-term) trend remains down, with weekly stochastics bearish. Initial support is pegged near $215.35, a price that marks the 33% retracement level from the rally from the contract low of $167.40 through the contract high of $239.30. The 50% retracement level is down at $203.35. Friday's CFTC Commitments of Traders report showed the noncommercial net-long position increasing by 117 contracts, with shorts decreased by 1,506 contracts and longs decreased by 1,389 contracts.

Lean hogs: The February contract closed $1.35 lower at $81.90 last week. The secondary (intermediate-term) trend remains down with weekly stochastics nearing the oversold level of 20%. Feb hogs were able to rally off its test of support near $79.30, posting a low of $78.675 last week. Given its bearish technical factors, the contract could look to slide back toward this low before a change in trend is seen.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.76, up 4 cents for the week. While the secondary (intermediate-term) trend remains up, weekly stochastics are above 90% indicating the cash market is sharply overbought. Such a market could quickly establish a bearish crossover (weekly stochastics) meaning a move to a secondary downtrend. The NCI.X is within striking distance of its next target of $3.84, a price that marks the 50% retracement level of the previous downtrend from $4.86 through the low of $2.81. National average basis was calculated at 34 cents under Friday evening, slightly weaker than the 5-year average of 28 cents under but stronger than 2009-2010 national average basis for the same week of 52 cents under.

Soybean meal: The January contract closed $3.50 lower last week at $363.50. Weekly stochastics posted a bearish crossover below the overbought level of 80% confirming the market's move to a secondary sideways trend. Resistance remains between $365.80 and $371.50, prices that mark the 61.8% and 67% retracement levels of the previous downtrend from $410.30 through the low of $293.70. Support is pegged between $363.90 and $358.70, the 33% and 38.2% retracement levels of the rally from the $293.70 low through the high of $398.90 (week of November 10). The market's forward curve remains inverted, reflecting a bullish commercial outlook that should keep the market supported. Friday's CFTC Commitments of Traders report showed the noncommercial net-long futures position decreasing by 6,858 contracts due to a reduction in longs of 6,168 contracts and an increase in shorts by 694 contracts.

Last Friday's CFTC Commitments of Traders were report showed positions as of Tuesday, December 16.

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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.