Technically Speaking

Weekly Analysis: Livestock Markets

Live Cattle: The June contract closed $2.20 higher at $151.20 last week. The technical picture for live cattle remains complicated, with chart patterns indicating a resumption of the previous downtrend while weekly stochastics show an uptrend. With the latter a function of the former, price patterns tend to win out over time. That would indicate that June cattle should resume a secondary (intermediate-term) downtrend based on its bearish reversal from the week of April 6. The contract could look to test support between $142.225 and $140.575, prices that mark the 61.8% and 67% retracement levels of the previous uptrend from $129.425 through the contract high of $162.925.

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Feeder Cattle: The August contract closed $5.475 higher at $215.675 last week. Similar to live cattle, August feeders show a complicated technical picture. The last three weeks have seen the establishment of a bearish reversal (week of April 6) and a bullish reversal (week of April 20). The latter saw August feeders test both minor support near $206.15 (low of $205.675) and secondary resistance near $217.35 (high of $216.35). The major (long-term) trend remains down on the monthly chart with resistance at $219.375.

Lean hogs: The June contract closed $3.175 higher at $79.45 last week. Like the cattle markets, June hogs are technically complex. A week after posting a bearish reversal thee contract closed sharply higher and above initial resistance near $78.575, a price that marks the 23.6% retracement level of the previous downtrend from $99.65 through the low of $72.05. Bullish weekly stochastics suggest a possible test of the 38.2% retracement level near $82.60, though a failure to take out its previous week's high of $79.75 could spark renewed selling interest.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.47, down 14 cents for the week. Weekly stochastics indicate the secondary (intermediate-term) trend remains down, dating back to the bearish crossover above the overbought level of 80% the week of December 29, 2014. Since then support at $3.47, the 33% retracement level of the previous uptrend from $2.81 through the high of $3.73, has generally held. With weekly stochastics still bearish, a downside breakout of the sideways range between $3.44 (low the week of January 26, 2015) and $3.74 (high the week of March 23) sets the stage for a sell-off to $3.14 (previous low of $3.44-$0.30 trading range), a price that marks the 67% retracement level of the previous uptrend from $2.81 through the high of $3.73.

Soybean meal: The July contract closed $1.40 lower at $313.30 last week. The market remains in a secondary (intermediate-term) downtrend with July meal holding above minor trendline support pegged this week at $308.40. Weekly stochastics are below the oversold level of 20%, nearing a potential bullish crossover.

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