Technically Speaking

Weekly Analysis: Livestock Markets

Source: DTN ProphetX

Live Cattle: The August contract closed $1.525 lower at $114.775. August live cattle remain in a secondary (intermediate-term) downtrend following the double-top formation near $127.50 and double bearish crossover by weekly stochastics above the overbought level of 80%. The contract's break of the interim low at $116.775 signals an extended sell-off to $106.05. This would be a test of support between $108.70 and $105.25, prices that mark the 50% and 61.8% retracement levels of the previous uptrend from $89.875 through the high of $127.50. Weekly stochastics remain bearish.

Feeder Cattle: The August contract closed $2.900 lower at $145.025. The contract's secondary (intermediate-term) trend remains down with a next target of $136.70. This price marks the 50% retracement level of the previous secondary uptrend from $109.90 through the high of $163.50. Weekly stochastics are still bearish.

Lean Hogs: The August contract closed $0.525 lower at $83.225 last week. August lean hogs are an interesting technical study, showing what looks to be a spike reversal following last week's activity. The contract posted a new high of $85.375, just short of the next major (long-term) target near $87.05, before closing lower for the week. Meanwhile, weekly stochastics are above the overbought level of 80% and nearing a bearish crossover. While the secondary (intermediate-term) trend hasn't changed direction yet, the contract needs to be watched closely for a bearish turn.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.47 3/4, up 13 cents for the week. Despite the strong rally the NCI.X remains in a secondary (intermediate-term) sideways trend on its weekly close-only chart. Resistance is at the previous high of $3.48 (week of June 5) and support the low of $3.19 1/4 (week of June 19). Despite last week's rally in the futures market, basis versus the September contract strengthened 1 1/2 cents to 44 3/4 (cents) under.

Soybean meal: The August contract closed $24.50 higher at $330.70. Soybean meal's secondary (intermediate-term) uptrend quickly extended after establishing a 2-week reversal. The August contract is already testing resistance at $331.10, a price that marks the 61.8% retracement level of the previous downtrend from $354.40 through the recent low of $293.50. The 76.4% retracement level is up at $340.00.

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