Live Cattle (continuous, nearby futures) look to have rolled into a major (long-term) downtrend at the end of March. The nearby April futures contract posted a high of $190.275 before closing at $185.00, down $0.35 for the month. This completed a bearish spike reversal on the continuous monthly chart. Initial support is at the previous 4-month low of $162.20 (December 2023). Theoretical Positions: Hedgers likely rolled put options up during the previous major uptrend and sold cash as needed. If traders are establishing long-term short positions near the March close, buy stops would be above the March high.
Feeder Cattle (continuous, nearby futures) remain in a major downtrend. This seems counterintuitive given the strong 3-month rally off the December low of $210.625, with the move through the March high of $256.875 looking to be Wave B (second wave) of the major 3-wave downtrend. Also note the nearby March contract closed at $247.75, down $1.25 for the month, completing a bearish spike reversal. This indicates Wave B has likely peaked, with Wave C (third wave) expected to take out the Wave A (first wave) low of $210.625 (December 2023). Downside targets are near $208.40 and $189.30. Theoretical Positions: As with live cattle, hedgers have likely continued to roll put options up and sell cash. Additional sales could be made near March settlements for the various futures contracts with buy stops above March highs.
Lean Hogs (continuous, nearby futures) still look to be in a major uptrend that began with the key bullish reversal during January 2024. The next upside target is near $93.55, the 50% retracement of the previous downtrend from $122.525 (August 2022) through $64.575 (January 2024). Note the continuous monthly chart is littered with reversal patterns, both bullish and bearish. Theoretical Positions: New long positions could’ve been established near the January close for the various futures contracts, with the February issue at $76.35.
