Technically Speaking

Weekly Analysis: Livestock Markets

Live Cattle: The December contract closed $6.80 lower at $134.925. As discussed last week, the minor (short-term) trend did turn down resulting in a sharp sell-off. Support is near $133.65, a price that marks the 67% retracement level of the rally from $128.10 through the recent high of $144.725. However, given the minor downtrend could see three lower weekly closes, and last week's was the second consecutive, this week could see Dec live cattle test support at the 76.4% retracement level near $132.00. This should spark continued noncommercial short-covering, with last Friday's CFTC Commitments of Traders report showing this group reducing their net-short futures holdings by 1,277 contracts.

Feeder Cattle: The more active January contract closed $11.175 lower at $172.025. Similar to live cattle, the minor (short-term) downtrend in feeder cattle should continue through at least early this week. This has turned the secondary (intermediate-term) uptrend sideways, looking for a third consecutive lower weekly close against the previous uptrend. Secondary support is between $171.85 and $169.575, prices that mark the 67% and 76.4% retracement levels of the previous rally from $164.05 through $187.50. Weekly stochastics are neutral, posting a bearish crossover above the oversold level of 20%.

Lean hogs: The December contract closed $4.20 lower at $55.00 last week. The secondary (intermediate-term) trend remains down as the contract posted a new low of $53.925. Major (long-term) support is at $54.10, the low from November 2010.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.49, down 6 cents for the week. Despite the lower weekly close the secondary (intermediate-term) trend remains sideways-to-up. Trendline support is pegged this week at $3.47, with support expected to come from a continued firming of national average basis. Last Friday saw the NCI.X come in 24 cents under the close of the December futures contract, 4 cents stronger than the previous Friday's 28 cents under. Resistance remains at $3.67, the 50% retracement level of the previous sell-off from $4.06 (week of July 13) through the low of $3.28 (week of August 31).

Soybean meal: The December contract closed $8.70 lower at $295.70. The secondary (intermediate-term) trend remains down as Dec meal moved to another new low of $294.00. Though weekly stochastics already indicate an oversold situation, next support is at the contract low of $286.00. Major (long-term) support on the market's monthly chart is at $295.10, then $275.40. The latter marks the low posted during December 2011.

The weekly Commitments of Traders report showed positions held as of Tuesday, November 3.

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