Technically Speaking

Weekly Analysis: Looking at the Livestock Markets

Todd Hultman
By  Todd Hultman , DTN Grains Analyst
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October feeder cattle have tried to push higher since mid-May but encountered resistance in late July, and broke below the July low on Friday, a bearish change in the short-term trend (DTN ProphetX chart).

Live Cattle:

After a couple months of challenging and breaking new highs without being able to sustain higher prices, October live cattle dropped $4.17 last week to $106.70 on Friday, a new five-week low. With noncommercials 73% long, Friday's new low is apt to trigger more selling and keep the 14-month corrective move headed sideways to lower, but it remains to be seen if prices can take out the May low of $101.50.

Feeder Cattle:

After trending higher from mid-May to late July, October feeder cattle fell $5.12 last week to $146.72 Friday, breaking below the July low of $148.22 and turning the short-term trend lower. On a weekly chart, the weekly stochastic has turned lower, but the 15-month trend remains roughly sideways between $137 and $160 per cwt.

Lean Hogs:

After the prior week's unexpected gain of $7.42 per cwt, October lean hogs fell back $6.82 last week, more in line with bearish fundamental expectations for hog prices. Closing Friday at $51.77, October hogs remain within striking distance of $50.00 per cwt, a mark of support that has served hogs well with a few brief exceptions over the past 15 years. Helping to support prices, CFTC's Commitment of Traders report said commercials are net long 31,999 contracts and 2018 pork exports are up 3% from a year ago, in spite of hostile tariffs.

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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