Technically Speaking

Weekly Analysis: Livestock Markets

Live Cattle: The April contract closed $4.15 lower at $148.80 last week. The secondary (intermediate-term) trend remains down with April live cattle moving below 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, Wave C of the ongoing Elliott Wave downtrend could test support at the 67% retracement level near $143.80. Friday's CFTC Commitments of Traders report showed this group reducing their net-long futures position by 9,235 contracts.

Feeder Cattle: The March contract closed $3.025 lower at $201.825 last week. The secondary (intermediate-term) trend remains down with March feeders below 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 below 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 $7.025 lower at $70.65 last week. The secondary (intermediate-term) trend remains down with April lean hogs posting a new contract low of $70.00. This is below major (long-term) support near $73.15, a price that marks the 67% retracement level of the previous major uptrend from $43.05 (August 2009) through the high of $133.425 (March 2014). Weekly stochastics are below the oversold level of 20%.

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Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.58, unchanged for the week. The secondary (intermediate-term) trend remains down with initial support at $3.47. This price marks the 33% retracement level of the previous uptrend from $2.81 through the high of $3.80. National average basis held steady last week at 29 cents under (NCI.X - March futures).

Soybean meal: The March contract closed $5.30 higher last week at $331.50. Support at $321.30 held the early week sell-off by the March contract. This price marks the 67% retracement level of the previous rally from $292.60 through the high of $379.70. Fundamentally the market remains bullish, as indicated by the strengthening inverse in its forward curve. However, Friday's CFTC report showed noncommercial traders trimming their net-long futures holdings by 9,253 contracts due in large part to a 7,925 contract increase in their short-futures position.

Last Friday's CFTC Commitments of Traders were report showed positions as of Tuesday, January 20.

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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