August lean hogs gained $2.92 last week, ending at $52.80 after it bounced back from a test of the 2009 low of $47.70 at the end of June -- a low mark that has held for 17 years. Hogs have been one of the most bearish ag markets in 2020, already suffering excess supply even before the coronavirus erupted and brought production speeds at meat plants to painfully slow paces for hog producers trying to hold back supplies. Technically, I talked about signs of possible support for hogs in this space on June 22 after August hogs also closed at $52.80 for the week. Since then, prices dipped to a new contract low of $47.52, but were unable to follow through lower. Friday's higher close turned the weekly stochastic up -- something that had not happened yet in June and is a sign of bullish change in hog's bearish price momentum.
October live cattle closed up $2.30 at a new four-month high of $106.87 last week, an encouraging sign beef demand may be on the rise after boxed beef prices fell back to pre-coronavirus levels. It is also encouraging for cattle prices that negotiated weighted averages caught up to formula prices on Monday, July 13 -- a bullish hint of increased demand for cash cattle. Technically, October cattle have come a long way from the coronavirus-related low of $84.87 in early April and the new four-month high is bullish. The next site of expected resistance is the 2020 high of $119.62, made in mid-January.
August feeder cattle had a bullish week, gaining $6.95 to finish at $142.70, which is also a new four-month high. Similar to live cattle, August feeders have come a long way from the April 6 low of $110.02. Last week's breakout to the upside, while technically bullish, faces numerous bearish fundamental concerns about backed-up cattle supplies, even at the feeder level. Now that prices broke above resistance of the old May high, the next level of anticipated resistance is $156.50, the high for 2020 made on January 10.
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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