Technically Speaking

Weekly Analysis: Livestock Markets

Source: DTN ProphetX

Live Cattle: The April contract closed $0.025 higher at $114.95. April live cattle remain an interesting technical study. Its secondary (intermediate-term) trend turned down with the high of $120.325 (week of January 17), a test of the 67% retracement level of the previous secondary downtrend from $132.525 through the low of $97.25. Wave A (first wave) of the downtrend resulted in a low of $112.075, a test of the 33% retracement level of the previous uptrend from $97.25 through the $120.325 high. Now Wave B (second wave) looks to have peaked near resistance at $117.575, the 67% retracement level of Wave A. Based on 3-wave analysis, the next move should take the contract back to support near $108.80.

Feeder Cattle: The April contract closed $2.65 lower at $121.55. Similar to April live cattle, April feeders remain in a secondary (intermediate-term) 3-wave downtrend. Last week's sell-off marked the peak of Wave B (second wave) near resistance at $125.625 and the beginning of Wave C (third wave). Initial support is at $119.775, the 50% retracement level of the previous uptrend from $108.925 through the high of $130.625, though continued bearish weekly stochastics would suggest a deeper retracement to the 67% level of $116.15.

Lean Hogs: The April contract closed $2.75 lower at $68.025 last week. The contract confirmed its move to a secondary (intermediate-term) downtrend with a new 4-week low of $66.025. This was also a test of initial support near $66.80, a price that marks the 33% retracement level of the previous uptrend from $55.05 through the high of 72.65. Weekly stochastics remain bearish following a crossover above the overbought level of 80% the week of February 6. The 50% retracement level is down at $63.85.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.26 1/4, down 5 1/4 cents for the week. The secondary (intermediate-term) trend still looks to be down. The NCI.X closed below its previous low weekly close of $3.26 3/4 (week of January 23), confirming the bearish crossover by weekly stochastics above the overbought level of 80% from that same week and the week of February 13. Initial support is down at $3.17 1/2, a price that marks the 33% retracement level of the previous uptrend from $2.85 1/4 through the high of $3.37 1/2.

Soybean meal: The May contract closed $8.20 lower at $335.70. The secondary (intermediate-term) trend is sideways though the contract posted a new 4-week low of $332.80 last week. With its minor (short-term) trend still down the contract could test minor support at $327.30 before finding increased buying interest.

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