Live Cattle June 2021
Weekly Close: $122.575, up $0.025
Trends: Secondary (Intermediate-term) = Up*, Minor (Short-term) = Down
June-August Futures Spread: Bearish. $0.175, down $0.85 for the week.
Analysis: June live cattle extended its secondary uptrend to a new contract high of $125.625 last week before finding increased selling interest. The minor trend turned down Thursday after posting the contract high and closing lower, creating a bearish spike reversal. This was followed by a sharp selloff into Friday’s weekly close. At least some of the pressure came from the commercial side of the market, indicated by the June contract losing ground to the August issue, the spread now sitting in bearish territory near the previous 5-year low. Keep in mind, though, the June contract did not complete a reversal pattern on its weekly chart, leaving the door open for a potential recovery rally.
Theoretical Position: It’s likely any short hedges have been stopped out with recent moves to a new contract high. While some short-term short positions might have been established last week, those looking to establish intermediate-term positions may wait for a clearer turn signal. If so, the previous 4-week low of $118.10 is well below last week’s close.
Live Cattle August 2021
Weekly Close: $122.40, up $0.875
Trends: Secondary (Intermediate-term) = Up*, Minor (Short-term) = Down
August-October Futures Spread: Bearish. (-$3.30), down $0.20 for the week.
Analysis: Similar to the June issue, August live cattle extended its secondary uptrend to a new contract high of $124.45 last week before finding increased selling interest. The minor trend turned down Thursday after posting the contract high and closing lower, creating a bearish spike reversal. This was followed by a sharp selloff into Friday’s weekly close. At least some of the pressure came from the commercial side of the market, indicated by the August contract losing ground to the October issue, the spread sitting in bearish territory near its previous 5-year low. As with June, a reminder the August issue did not establish a bearish reversal pattern on its weekly chart.
Theoretical Position: It’s possible some short-term short positions were established near last Thursday’s close of $124.025 based on the minor bearish spike reversal.
Feeder Cattle May 2021
Weekly Close: $149.625, up $0.40
Trends: Secondary (Intermediate-term) = Down, Minor (Short-term) = Down
May-August Futures Spread: Bearish. (-$10.325), down $1.55 for the week.
Analysis: The secondary trend remains down following the bearish spike reversal from the previous week. Given this, the downside target area is between $143.35 and $137.10.
Theoretical Position: Short hedges might’ve been established near the recent weekly close of $142.375 (week of December 28). Additional sales could’ve been established near the previous weekly close of $149.225.
Feeder Cattle August 2021
Weekly Close: $159.95, up $1.95
Trends: Secondary (Intermediate-term) = Up, Minor (Short-term) = Down
August-September Futures Spread: Neutral. (-$0.925), down $0.30 for the week.
Analysis: While the secondary trend remains up, the minor trend turned down last Thursday as August feeders hit a new contract high of $162.40 and closed lower for the day. Initial minor support is at the 4-day low, Friday’s low, of $159.10.
Theoretical Position: Intermediate-term short hedges were likely stopped out as the contract moved to a new high last week. However, some short-term short positions may have been established near Thursday’s close of $161.60 based on the minor bearish spike reversal. If so, buy stops would be placed just above the contract high of $162.40.
Lean Hogs June 2021
Weekly Close: $108.95, up $2.625
Trends: Secondary (Intermediate-term) = Up, Minor (Short-term) = Up
June-August Futures Spread: Bullish. $6.525, up $2.35 for the week.
Analysis: June lean hogs remain a Type 9 market, the most bullish type, as it extended its secondary uptrend to a new contract high of $109.55 while commercial buying continues to provide a great deal of support.
Theoretical Position: There are no positions at this time.
