Technically Speaking

Monthly Analysis: Livestock Markets

Source: DTN ProphetX

Live Cattle: The June contract closed at $114.925, down $9.10 on the monthly chart. The market looks to have reestablished its major (long-term) downtrend as the June contract moved to a new low in April of $113.90. However, this is a test of support between $115.575 and $111.025, prices that mark the 61.8% and 67% retracement levels of the previous uptrend from $80.225 (March 2009) through the high of $172.75 (November 2014) with monthly stochastics already well below the oversold level of 20%. This could lead to a consolidation pattern over the coming months.

Feeder Cattle: The August contract closed at $140.375, down $14.875 on the monthly chart. The market resumed its downtrend as the more active August contract fell to a new low of $138.10 late in the month before posting a modest rally. The monthly low was a test of support near $183.825, a price that marks the 67% retracement level of the previous uptrend from $85.45 (December 2008) through the high of $245.75 (October 2014). If the market is able to stabilize, the April low could prove to be the bottom of a three-wave downtrend (Wave C).

Lean Hogs: The June contract closed at $81.70, up $0.85 on the monthly chart. The market remains in a major (long-term) uptrend, closing above resistance near $78.775 but below next resistance at $82.75. These prices mark the 33% and 38.2% retracement levels respectively of the previous downtrend from $132.825 (June 2014) through the low of $51.80 (November 2015). Monthly stochastics are nearing the overbought level of 80% giving the market an outside chance of a 50% retracement up to near $92.30.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.56 3/4, up 32 3/4 cents for the month. The major (long-term) trend remains sideways with resistance at the high from October 2015 near $3.64 1/4. A move through this price would restart the market's major uptrend dating back to October 2014, and establish an upside target of $4.05 3/4. This would be a test of both the July 2015 high of $4.05 3/4 and $4.10, the 23.6% retracement level of the previous major downtrend from near $8.26 1/4 (August 2012) through the October 2014 low near $2.81 1/4.

Soybean meal: The July contract closed at $334.80, up $64.50 on the continuous monthly chart. The major (long-term) trend is up with the July contract moving quickly toward initial resistance at $353.10. This price marks the 33% retracement level of the previous downtrend from $541.80 (September 2012) through the low of $258.90 (February 2016). Given the bullish monthly stochastics, reflecting increased buying interest from noncommercial traders, and a bullish forward curve the market could extend its rally to the 50% retracement level of $400.30.

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