Technically Speaking

Monthly Analysis: Livestock Markets

Source: DTN ProphetX

Live Cattle: The April contract closed at $151.70, down $5.75 on the monthly chart. The major (long-term) trend remains down following the bearish crossover by monthly stochastics at the end of December. Given the continued bullish view of supply and demand indicated by the strength of the April to June futures spread (see chart), initial support pegged between $141.85 and $137.30, prices that mark the 33% and 38.2% retracement levels of the previous major uptrend from $79.975 (March 2009) through the high of $172.75 (November 2014), should hold the downtrend. Next support is at the 50% retracement level near $126.35.

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Feeder Cattle: The March contract closed at $201.90, down $3.30 on the monthly chart. The market extended its major (long-term) downtrend established with the bearish crossover of monthly stochastics at the end of October 2014. The February low of $193.00 was a test of initial support near $192.40, a price that marks the 33% retracement level of the previous major uptrend from $85.50 (December 2008) through the high of $245.75 (October 2014). If the market is able to rally, initial resistance is between $210.55 and $219.375.

Lean Hogs: The April contract closed at $67.475, down $4.775 on the monthly chart. The major (long-term) trend remains down. However, monthly stochastics are in single digits indicating the trend could be in for a change. Similar to crude oil, continued bearish supply and demand, in this case indicated by the sharp downtrend in the April to June futures spread, could keep the market from establishing a major uptrend.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.65, up 21 cents for the month. The major (long-term) trend remains up. Initial resistance is at the December high of $3.80. Beyond that resistance is pegged at $4.90, a price that marks the 38.2% retracement level of the previous major downtrend from $8.26 (August 2012) through the low of $2.81 (October 2014). The April 2014 high was $4.86.

Soybean meal: The March contract closed at $353.70, up $23.80 on the continuous monthly chart. Monthly studies remain a mix of signals with the last major stochastics indicator a bullish crossover from June 2010 indicating the major (long-term) trend is up. However, soybean meal has established a wide ranging sideways trend between $554.20 and $302.00. With the nearby contract near the low end of this range, and the inverted forward curve continuing to indicate bullish fundamentals, the nearby contract could look to rally back to near the mid-point of its sideways range at $428.20.

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