Technically Speaking

Weekly Analysis: Live Cattle, Feeder Cattle, Lean Hogs

Todd Hultman
By  Todd Hultman , DTN Grains Analyst
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The weekly chart of August Lean Hogs above shows a bullish looking chart, even after USDA estimated June 1 hog and pig inventory up 3.4% from a year ago. August hog prices appear to be finding support after a 62% retracement of the 2016-17 uptrend. (DTN ProphetX chart)

Live Cattle: August cattle closed up 0.82 last week to $106.72 on Friday, its highest weekly close in three months. Most impressive was how Monday's limit-down move, related to higher-than-expected placements the previous Friday was erased by the following Friday's limit-up close. With speculators mostly washed out of the market, last week's higher close was able to keep the weekly stochastic pointed higher, supporting the idea of a bullish change of trend.

Feeder Cattle: August feeder cattle gained $2.12 last week to $151.32, after Friday's limit-up close to prices to their highest level in over three months. After more than a year of chopping sideways to lower, the price trend has now turned higher with support from commercials net long 5,222 contracts as of June 29, their most bullish position since July 2016. As with hogs, a fundamental case for higher feeder prices is not well understood and the 2017 high of $163.50 may offer some resistance. Otherwise, August feeder cattle appear to have bullish potential.

Lean Hogs: August lean hogs were up $1.07 last week to $76.45, after prices held support above the 62% retracement line at $73.60. More specifically, August hogs survived an early drop of over a dollar Friday and closed higher after Thursday's June 1 hogs and pigs inventory showed a comfortable 3.4% increase from a year ago. With U.S. hog slaughter only running up 2.7% year-to-date, it is difficult to find a bullish reason for hogs to trade higher, but we do have to note that commercials are holding their largest net long position on record, finding attractive value at current prices. With August hogs holding support, a close above $80, if it happened, would turn the trend higher.

Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of livestock and livestock futures involve substantial risk and are not suitable for everyone.

Todd Hultman can be reached at Todd.Hultman@dtn.com

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