Live Cattle June 2019: The contract closed at $113.425, down $1.625 for the week. The contract remains in a secondary (intermediate-term) 3-wave downtrend with next support near $112.45. This price marks the 61.8% retracement level of the previous uptrend from $104.775 (week of April 2, 2018) through the high of $124.90 (week of March 18). Weekly stochastics are bearish above the oversold level of 20% indicating this Wave C (third wave) move could extend to test support this coming week. It is interesting to note, though, that the June-to-August spread saw a great deal of commercial support last week, closing at $4.275. This was a gain of $1.875 from the previous week. If continued this coming week, then selling could be limited in the June contract. Position: Sales could’ve been made at an average price of roughly $120.50 over the last couple weeks. These positions need to be watched closely as the June contract nears support, particularly if commercial buying continues to be seen. Equivalent positions in the August contract would be at an approximate average of $116.75 (closed at $109.15 last week).
Feeder Cattle August 2019: The contract closed at $146.375, down $6.475 for the week. August feeders extended the secondary (intermediate-term) downtrend to a test of its previous low of $145.825. Last week’s low was $146.25. Weekly stochastics remain bullish above the oversold level of 20%, indicating there is still room to the downside over the coming weeks. However, daily stochastics are near 0% reflecting a sharply oversold short-term situation that could lead to buying next week. Position: Given the speed of the sell-off in the market, it’s possible the only short positions held were put in place when the contract fell to a new 4-week low below $153.85 the week of April 22.
Lean Hogs June 2019: The contract closed at $92.75, up $4.00 for the week. Despite its higher weekly close the contract remains in a secondary (intermediate-term) 3-wave downtrend. The minor (short-term) trend has turned up (see chart), rallying off the recent test of support near $87.95, a price that marks the 38.2% retracement level of the previous secondary uptrend from $68.75 (week of July 9, 2018) through the high of $99.825 (week of April 1). The minor uptrend should be thought of as Wave B (second wave) of the secondary pattern. Next minor resistance is up near $94.925, the 61.8% retracement level of Wave A from the $99.825 high through the low of $87.025 (April 29). Position: Some initial short hedges may have been established near the recently weekly close of $96.76. If not, this market needs to be watched closely for the next opportunity as the current Wave B nears its end.
Class III Milk June 2019: The contract closed at $16.58, up $0.19 for the week. The June contract extended its secondary (intermediate-term) 5-wave uptrend last week, hitting a high of $16.62. This pulled weekly stochastics well above the overbought level of 80%, increasing the market’s vulnerability to rolling over into a 3-wave downtrend. Resistance on the market’s long-term monthly chart is at $16.64 (high from September 2018), then $17.44 (December 2016). Monthly stochastics (long-term momentum indicator) remain bullish below the overbought level of 80%. Position: There have been no sell signals in the market at this time. However, producers could continue to use this uptrend to lock in portions of their 2019 production.
