Technically Speaking

Weekly Analysis: Livestock Markets

Live Cattle: The August contract closed $0.70 lower at $150.575. The secondary (intermediate-term) trend has looks to have turned down with last week's lower close establishing a bearish crossover by weekly stochastics above the overbought level of 80%. Though a secondary downtrend would be contra-seasonal it would put the market back in step with its major (long-term) trend. If so, major support on the continuous monthly chart is between $141.85 and $137.30. The previous low of the August contract was $137.975. Friday's CFTC Commitments of Traders report showed noncommercial interests reducing their net-long holdings by 2,379 contracts, and their long futures position by 1,995 contracts.

Feeder Cattle: The August contract closed $1.05 lower at $221.90 last week. The contract continues to test resistance near $224.325, a price that marks the 67% retracement level of the previous downtrend from $237.95 through the low of $196.675. Weekly stochastics remain above the overbought level of 80%, nearing a potential bearish crossover in the weeks ahead, signaling a possible move to a secondary (intermediate-term) downtrend.

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Lean hogs: The August contract closed $1.675 lower at $80.825 last week. The recent three-week sell-off resulted in a test of support near $80.00, a price that marks the 50% retracement level of the initial rally from $73.55 through the high of $85.05. With the secondary (intermediate-term) trend still up the August contract could look to retest resistance at $84.45, a price that marks the 50% retracement level of the previous secondary downtrend from $95.35 through the 73.35 low. If so it would potentially establish a double-top formation.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.42, up 9 cents for the week. The rally off support at $3.31, a price that marks the 50% retracement level of the previous secondary uptrend from $2.81 through the high of $3.80, established a bullish crossover by weekly stochastics below the oversold level of 20%. This would indicate the secondary (intermediate-term) trend is now up with initial resistance pegged at $3.50.

Soybean meal: The July contract closed $0.80 lower at $304.90. The July contract was able to rally after posting a new low for this secondary (intermediate-term) downtrend of $296.30. The subsequent rally off this new low sets up a potential double-bottom formation with its contract low of $294.40. Combined with the bullish crossover by weekly stochastics below the oversold level of 20%, the secondary trend looks to have turned up. Support continues to come from bullish fundamental indicated by the inverse in the market's forward curve. Also, Friday's CFTC Commitments of Traders report showed noncommercial traders adding 2,830 contracts to their net-long futures position.

The weekly Commitments of Traders report showed positions held as of Tuesday, June 2.

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