Live Cattle: After churning in a tight sideways range for several months, December cattle jumped up $3.62 last week and finished at $118.05 per cwt, their highest close in six months, supported by an even more bullish close in feeder cattle (see next comment). The next resistance on a weekly chart is $128, the site of the 2017 high for the December contract.
Feeder Cattle: October feeder cattle closed up $5.92 at $158.87, the highest October close in over two years. For Elliot Wave aficianados, last week's surge higher put an end to the corrective action that prices have shown since May 2017 and holds promise for higher prices ahead. A more traditional look at the charts also looks bullish, acknowledging a breakout higher from the sideways trend while commercials have been sitting net long on the futures board since March. Fundamentally, last week's breakout suggests feeder supplies are tighter than have been expected in this year's active demand environment.
Lean Hogs: December lean hogs slipped 0.15 lower last week, ending at $56.65 per cwt, but still near its highest prices in a month. The low in December hogs of $43.80 on August 9 was near its lowest in 15 years and should serve as good support. However, the rebound in prices since then has been accompanied by commercials reducing net long positions, suggesting that the short-term uptrend is running out of gas. Prices are currently encountering resistance at $57.00.
Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of livestock and livestock futures involve substantial risk and are not suitable for everyone.
Todd Hultman can be reached at Todd.Hultman@dtn.com
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