Technically Speaking

Monthly Analysis: Livestock Markets

Source; DTN ProphetX

Live Cattle: The October contract closed at $111.725, down $3.10 on the monthly chart. After posting a new low of $105.25 in July the market was able to rally late to close back above support at $111.025. This price marks the 67% retracement level of the previous uptrend from $80.225 (March 2009) through the high of $172.75 (November 2014). With monthly stochastics still below the oversold level of 20%, the market could try to establish a major (long-term) change in trend.

Feeder Cattle: The August contract closed at $140.05, down $4.25 on the monthly chart. The market posted another new Wave C low of $134.126 in July before rallying back above support near $183.825 at the close. This price marks the 67% retracement level of the previous uptrend from $85.45 (December 2008) through the high of $245.75 (October 2014).

Lean Hogs: The October contract closed at $59.05, down $24.225 on the monthly chart. October hogs are sharply oversold on its weekly chart, indicating the secondary (intermediate-term) downtrend could soon come to an end. If so this would also mark the end of Wave 2 of the major (long-term) 5-Wave uptrend that began on the monthly chart with the June 2016 peak of $90.425. A normal Wave 2 tends to see nearly a full retracement of Wave 1, in this case starting with the Wave C low of $51.80. However, no bullish crossover has been established on the October weekly chart to this point indicating the secondary downtrend has come to an end.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.05 1/2, down 20 3/4 cents for the month. Trends analysis is complicated in cash corn. While the argument could be made that the NCI.X remains in a major (long-term) 5-Wave uptrend, with the ongoing secondary (intermediate-term) downtrend amounting to a Wave 2 retracement, the market also looks to be in a major sideways pattern between the October 2014 low of $2.18 1/2 and the July 2015 high of $4.05 3/4. Both weekly and monthly stochastics are below the oversold level of 20%, hinting at a possible end to the Wave 2 sell-off in the coming month(s).

Soybean meal: The more active December contract closed at $347.70, down $53.30 on the continuous monthly chart. The market remains in a secondary (intermediate-term) downtrend that could extend to near $316.70. This price marks the 67% retracement level of the Dec contract's previous secondary uptrend from $258.90 through the high of $432.50. While the monthly chart continues to show a major (long-term0 5-Wave uptrend, this secondary downtrend would represent a Wave 2 retracement. Seasonally soybean meal tends to stay under pressure through September.

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