Technically Speaking

Weekly Analysis: Livestock Markets

Source: DTN ProphetX

Live Cattle: The April contract closed $1.90 higher at $124.625. April live cattle remain in a 3-wave downtrend, with the recent rally (Wave B, second wave) testing resistance near $125.50. This price marks the 61.8% retracement level of Wave A from $130.10 through the low of $118.05. The latter was itself a test of initial support near $118.15, the 38.2% retracement level of the uptrend from the contract low of $98.85 through the $130.10 contract high. Wave C is expected to move below the low of Wave A, with downside targets near $114.50 and $110.75.

Feeder Cattle: The March contract closed $1.125 higher at $146.725. March feeders remain in a secondary (intermediate-term) 3-wave downtrend, with the recent rally amounting to Wave B (second Wave) and testing resistance between $146.175 and $148.50. These prices mark the 38.2% and 50% retracement levels of the Wave A from $159.925 through the low of $138.30 (week of December 18). When Wave C forms it is expected to move below the Wave A low, with a downside target near $133.50.

Lean Hogs: The more active April contract closed $1.70 lower at $73.80. April lean hogs remain in a secondary (intermediate-term) downtrend. The contract posted a new 4-week low of $73.275 last week, with next support pegged near $72.10. This price marks the 38.2% retracement level of the previous uptrend from the contract low of $63.75 through the recent contract high of $77.25.

Corn (Cash): The DTN National Corn Index (NCI, national average cash price) closed at $3.25 1/4, up 4 1/4 cents for the week. The NCI remains in a secondary (intermediate-term) seasonal uptrend on its weekly chart. However weekly stochastics are above the overbought level of 80%, in position for a bearish crossover, as the NCI tests resistance at $3.26 1/4. This price marks the 50% retracement level of thee previous downtrend from $3.57 1/4 through the low of $2.95 1/4. Given the continued bearishness of futures spreads, a 50% retracement could be as much as cash corn can rally for this move.

Soybean meal: The March contract closed $4.10 higher at $335.70. The contract continues to post a series of spike highs followed by dramatic sell-offs. It could be argued that its secondary (intermediate-term) trend is a wide-ranging sideways pattern between the recent spike high of $351.20 and spike low of $310.30. Weekly stochastics remain neutral-to-bullish above the oversold level of 20%, and below the midpoint of the stochastics range at 50%.

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