Live Cattle (continuous, nearby futures) extended its major (long-term) downtrend during April with the nearby futures contract hitting a low of $174.20. The initial downside target is near $148.70, the 38.2% retracement level of the previous uptrend from $81.45 (April 2020) through the high of $190.275 (March 2024). Theoretical Positions: Hedgers likely rolled put options up during the previous major uptrend and sold cash as needed. Traders likely established short futures positions near the March close of $185.00 based on last month’s bearish spike reversal.
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’ve been 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 nearby April contract hit a high of $98.975, a test of the next upside target near $100.40. The latter price marks the 61.8% retracement level of the previous downtrend from $122.525 (August 2022) through the low of $64.575 (January 2024). Theoretical Positions: New long positions could’ve been established near the January close for the various futures contracts.
