October live cattle closed up $1.90 last week to $109.97, its highest close in two months with help from $2 higher cash prices in the North. In the bigger picture, prices have held in a trading range from roughly $101 to $123 the past two years and have stayed close to their usual seasonal pattern in 2019. The weekly stochastic turned higher in July, but with both the U.S. and world economies expected to be slow in the second half of 2019, it is difficult to make a case for prices breaking out of their established range anytime soon.
Feeder cattle have shown bearish pressure from corn's rising prices since May, but last week's 17-cent gain in December corn failed to hold feeders down. October feeders closed up $3.95 last week at $142.85 per cwt, its highest weekly close in over a month. Technically speaking, October feeders have been in a sideways trading range for over two years. Boundaries of the range were expanded in 2019 and are now $132 to $163, but last week's higher close, accompanied by a bullish turn in the weekly stochastic, suggest feeder cattle still have support for a slightly wider range.
October lean hogs closed up $3.15 last week, ending at $73.22, a likely area for finding support. After hog prices rallied higher in March and early April on bullish enthusiasm about African swine fever, they then fell back as U.S. pork purchases disappointed the most bullish hopes. The disease continues to spread and October hog prices now appear to be finding support at their old breakout level and at their one-year average, both of which are near $70. The weekly stochastic is turning higher and the uncertain course of African swine fever still offers bullish potential for U.S. hog prices.
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
Follow him on Twitter @ToddHultman
© Copyright 2019 DTN/The Progressive Farmer. All rights reserved.