Technically Speaking

Weekly Analysis: Livestock Markets

By Darin Newsom , DTN Senior Analyst
Source: DTN ProphetX

Live Cattle: The April contract closed $3.275 higher at $137.225. The secondary (intermediate-term) trend continues to strengthen though the futures contract has been unable to move above resistance at $139.025. This price marks the 50% retracement level of the previous downtrend from $155.00 through the low of $123.05. Weekly stochastics continue to move toward the overbought level of 80% as noncommercial traders continue to buy. Friday's CFTC Commitments of Traders report showed this group adding 4,208 contracts to their net-long futures position, putting the total at 5,924 contracts. Major (long-term) resistance on the market's monthly chart remains between $138.90 and $141.40.

Feeder Cattle: The April contract closed $4.125 higher at $158.75. The market remains a complicated mix of technical signals. Last week saw the futures contract post a new 4-week high of $159.875, confirming the secondary (intermediate-term) uptrend indicated by bullish weekly stochastics. However, its daily chart shows the minor (short-term) trend could be turning down. It's interesting to note that on the weekly chart, initial resistance at the 23.6% retracement level of the previous secondary downtrend is pegged near $159.175. The 33% retracement level is up near $166.00.

Lean hogs: The April contract closed $1.95 higher at $70.85 last week. Despite last week's rally the secondary (intermediate-term) trend still looks to be nearing a bearish change. Secondary resistance remains at the recent high of $72.225 while stochastics continue to hold above the overbought level of 80%. Major (long-term) resistance remains near $71.05, the 23.6% retracement of the previous downtrend. If the secondary trend turns down it could indicate Wave 1 of the major uptrend has peaked.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.31, down 10 3/4 cents for the week. The secondary (intermediate-term) trend is sideways with next support near $3.29. Weekly stochastics are neutral-to-bearish above the oversold level of 20%. National average basis weakened by 3/4 cent last week with Friday's NCI.X coming in 28 1/2 below the close of the May futures contract.

Soybean meal: The March contract closed $5.40 lower at $260.60. The secondary (intermediate-term) remains down with the contract posting a new low of $258.90 last week. Weekly stochastics remain well below the oversold low of 20% indicating the trend could soon turn up. Friday's weekly CFTC Commitments of Traders report showed noncommercial interests increasing their net-short futures position by 10,129 contracts to a total of 46,575 contracts.

*The weekly Commitments of Traders report showed positions held as of Tuesday, February 23.

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