Technically Speaking

Weekly Analysis: Livestock Markets

March Feeder Cattle are testing support. (Source: DTN ProphetX)

Live Cattle: The April contract closed $6.475 lower at $152.95 last week. The secondary (intermediate-term) trend remains down, with April live cattle posting a low of $151.35. The contract is nearing support at $150.65, a price that marks the 50% retracement level of the uptrend from $130.20 through the high of $171.10. Weekly stochastics are bearish and still above the oversold level of 20% indicating the market could extend its sell-off. If so, next support is at the 67% retracement level near $143.80. For a more in-depth discussion of the technical patterns of the April live cattle contract see the Technically Speaking blog post from Wednesday, January 14.

Feeder Cattle: The March contract closed $7.70 lower at $204.85 last week. The secondary (intermediate-term) trend remains down with March feeders testing support at $204.90. This price marks the 50% retracement level of the previous uptrend from $172.00 through the high of $237.80. Weekly stochastics are nearing the oversold level of 20% indicating this secondary downtrend could soon come to an end. Based on the bearish flag pattern from two weeks ago it remains possible that March feeders could spike to a test of the 67% retracement level near $194.00.

Lean hogs: The April contract closed $2.375 lower at $77.675 last week. The secondary (intermediate-term) trend remains down with April lean hogs posting a new contract low of $76.225. Weekly stochastics are below the oversold level of 20%, and if the April contract can extend its rally off last week's low could soon see a bullish crossover (stochastics). This would indicate a move to a secondary uptrend with an initial target price near $83.35, the 33% retracement level of the downtrend from its contract high of $97.65.

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Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.58, down 10 cents for the week. While the secondary (intermediate-term) trend remains down the NCI.X continues to hold above initial support at $3.47. This price marks the 33% retracement level of the uptrend from $2.81 through the high of $3.80, itself a test of resistance pegged at $3.84. Given the neutral to slightly bearish view of underlying fundamentals indicated by the carry in the March to May futures spread the NCI.X could eventually test support at the 50% retracement level of $3.31.

Soybean meal: The March contract closed $22.90 lower last week at $326.20. While technical indicators continue to show the market remains in a secondary (intermediate-term) sideways trend, the March contract has posted a sharp sell-off resulting in a test of support at $321.30. This price marks the 67% retracement level of the previous uptrend from $292.60 through the high of $379.70. Given the continued inverse in market's forward curve (reflecting a bullish commercial outlook), the contract was expected to hold support between the 33% and 50% retracement levels, $350.30 and $335.90 respectively. However, as Friday's CFTC Commitments of Traders report showed, noncommercial traders liquidated another 9,633 contracts of their net-long futures position.

Last Friday's CFTC Commitments of Traders were report showed positions as of Tuesday, January 13.

To track my thoughts on the markets throughout the day, follow me on Twitter:www.twitter.com\Darin Newsom


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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