Technically Speaking

Monthly Analysis: Livestock Markets

Source: DTN ProphetX

Live Cattle: The April contract closed at $114.175, down $1.875 on the monthly chart. While the market remains in a major (long-term) 5-Wave uptrend the January high of $121.05 was not only a test of resistance at $121.625, a price that marks the 33% retracement level of the previous downtrend from $172.75 (November 2014) through the low of $96.10 (October 2016), but also the peak of Wave 1. The subsequent Wave 2 should see at least a 76.4% retracement of Wave 1, putting the target near $102.00.

Feeder Cattle: The March contract closed at $122.775, down $2.325 on the monthly chart. Feeder cattle posted a bearish reversal in January. The March contract traded outside the December 2016 range of $131.55 (January high of $131.75) to $122.925 (January low of $122.325) before closing lower for the month. Wave 2 should see the market retrace at least 76.4% of Wave 1, putting the target near $118.70. Monthly stochastics remain bullish below the oversold level of 20%.

Lean Hogs: The April contract closed at $69.25, up $3.10 on the monthly chart. Lean hogs remain in a major (long-term) 5-Wave uptrend. Next resistance is pegged near $71.575, a price that marks the 33% retracement level of the previous major 3-Wave downtrend from $133.425 (March 2014) through the low of $40.70 (October 2016). The 50% retracement level is up near $87.05.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.24 1/4, up 9 cents for the month. While the market continues to indicate it's in a major (long-term) 5-Wave uptrend, the spike low of $2.7302 (August 2016) remains a problem. This took the NCI.X below what was the Wave C low of $2.81 1/2 from October 2014, something not normally seen in an uptrend. Also, the NCI.X continues to deal with a bearish reversal posted during June 2016 as it traded outside the May range before closing lower. Still, the NCI.X established a new 4-month high of $3.34 in January, generally viewed as a bullish signal. Resistance is between the old consolidation range of roughly $3.24 to $3.80.

Soybean meal: The March contract closed at $334.60, up $18.00 on the continuous monthly chart. The market remains in a major (long-term) 5-Wave uptrend. The September low of $294.10 was the Wave 2 bottom, retracing 80% of Wave 1 from the low of $258.90 (February 2016) through the high of $432.50 (June 2016). Resistance is pegged at $367.00, a price that marks the 38.2% retracement level of the previous downtrend from $541.80 (September 2012) through the low of $258.90 (February 2016). The 50% retracement level is up at $400.30.

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