Live Cattle April 2019: The contract closed at $126.275, down $0.575 for the week. The argument could be made that April live cattle have moved into a secondary (intermediate-term) downtrend. Weekly stochastics established a bearish crossover above the overbought level of 80% the week of January 21, leading to last week’s bearish spike reversal. This pattern consists of last week’s move to a new high of $129.475 before closing lower for the week. Confirmation of a new downtrend would be a move to a new 4-week low below $123.50. Position: If not stopped out, some initial short hedge positions at $124.00 may still be in place. Additional hedges could be placed near last week’s close of $126.275.
Feeder Cattle March 2019: The contract closed at $142.525, down $1.10 for the week. March feeders remain in a secondary (intermediate-term) sideways pattern between resistance at $147.575 ad support at $140.35. The most recent signal was a bearish outside trading range (week of December 31) that included the $147.575 high. Position: Open, looking for a breakout of the sideways pattern. Some short hedges could’ve been established at $142.825, the close the week of December 31, given the bearish outside range. These positions need to be monitored closely.
Lean Hogs April 2019: The contract closed at $60.125, down $2.00 for the week. April lean hogs extended its secondary (intermediate-term) downtrend last week, posting a new low for the move of $59.825. Weekly stochastics are nearing single-digits, indicating a sharply oversold situation. This could eventually lead to a bullish crossover, signaling a potential change in trend. Support is now at the low of the previous secondary uptrend at $57.80 (week of July 9, 2018). Position: Based on the ongoing downtrend, short-hedge positions could’ve been established at $71.975 (close the week of November 26 with bearish crossover by stochastics) and/or $69.60 (week of December 17) on a move to a new 4-week low.
Class III Milk March 2019: The contract closed at $14.39, up $0.13 for the week. The contract posted an inside trading range last week, and with the higher weekly close stochastics were able to establish a bullish crossover below the oversold level of 20%. This would indicate a new secondary (intermediate-term) uptrend is possible in the near future. Confirmation of this turn would be a move to a new 4-week high, far above the close at $15.16. Position: End-users could look at covering some short-term needs near last week’s close of $14.39 based on the crossover by weekly stochastics. For now, producers could continue to hold short-hedges until a clearer signal of a trend change is seen.
Soybean Meal March 2019: The contract closed at $311.80, down $2.10 for the week. March bean meal remains in a secondary (intermediate-term) sideways trend. After posting a bearish outside week the contract could test initial support at the 4-week low of $309.10, then support at the low of $307.10 (week of December 31).