Technically Speaking

Weekly Analysis: Livestock Markets

By Darin Newsom , DTN Senior Analyst
Source: DTN ProphetX

Live Cattle: The April contract closed $4.825 higher at $133.95. High volatility remains a key factor in cattle. This continues to lead to wide weekly trading ranges with the secondary (intermediate-term) trend still sideways to up. Initial resistance is at the 4-week high of $136.725 with support at the 4-week low of $128.60. Last Friday's weekly CFTC Commitments of Traders report* showed noncommercial interests reducing their net-long futures position to 1,716 contracts. Weekly stochastics remain bullish with the last secondary signal a crossover below the oversold level of 20% (week of September 20, 2015).

Feeder Cattle: The March contract closed $5.85 higher at $155.875. The secondary (intermediate-term) trend remains sideways to up with initial resistance at the 4-week high of $160.70. Beyond that the upside target continues to be pegged near $165.275, a price that marks the 33% retracement level of the previous downtrend from $212.525 through the low of $141.70. Weekly stochastics are bullish indicating buying momentum could continue to be seen. Last Friday's weekly CFTC Commitments of Traders report* showed noncommercial interests holding a net-long futures position of 2,667 contracts, an increase of 919 contracts from the previous week.

Lean hogs: The April contract closed $1.475 lower at $68.90 last week. As discussed in previous analysis, the secondary (intermediate-term) trend was set for a change. Last week's activity looks to have established a top, meaning the secondary trend could now be viewed as down. Weekly stochastics established a bearish crossover above the overbought level of 80%, confirming this potential change in trend. If so initial support is calculated near $67.90, a price that marks the 33% retracement level of the previous uptrend from $59.225 through last week's high of $72.225. Beyond that support may be found at the 50% retracement level of $65.725 or the 67% retracement level near $63.55.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.41 3/4, up 6 1/2 cents for the week. The secondary (intermediate-term) trend is sideways with initial resistance at the 4-week high near $3.48 1/2 and support at the 4-week low near $3.35 1/4. Weekly stochastics are neutral above the oversold level of 20%. National average basis weakened a 1/2 cent last week with Friday's NCI.X coming in 23 3/4 below the close of the March futures contract.

Soybean meal: The March contract closed $2.50 higher at $264.50. The secondary (intermediate-term) trend looks to be in the process of turning up with the contract holding above its previous low of $260.40 allowing weekly stochastics to establish a bullish crossover below the oversold level of 20%. Initial resistance is at the 4-week high of $274.90 with the first retracement target up at $281.50, a price that marks the 23.6% level of the previous downtrend from $350.00 through the $260.40 low.

*The weekly Commitments of Traders report showed positions held as of Tuesday, February 16.

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