CME hog and cattle futures ended the week on a soft note, though bullish traders retain a solid near-term technical advantage, chart analyst Jim Wyckoff said.
Live cattle futures are in an 11-week uptrend and “there are still no early technical clues to suggest a market top is close at hand,” said Wyckoff, who’s president of JimWyckoff.com, a market analysis website.
Near Friday’s close, October live-cattle futures fell 0.95 cent to 98.15 cents a pound, after reaching a life-of-contract high at $1.00075 on Aug. 24. While October futures are down 1.1 percent this week, prices are still up 11 percent from a six-month low of 88.6 cents put in on June 11.
From a technical standpoint, a bullish “pennant” pattern has formed on October cattle’s daily bar chart, Wyckoff said. Stochastics and the Relative Strength Index, two widely-followed technical indicators, are overbought but remain neutral to bullish, he added.
That signals sideways to higher prices are possible in the near term. If October cattle extend the summer rally, weekly resistance at $1.002 a pound is the next upside target for market bulls, he said.
Longer-term, bullish traders aim to push and settle cattle futures above longer-term technical resistance at the 2007 high of $1.0293, based on nearby futures.
Among bearish traders, the next downside technical objective is to push October cattle below “solid” technical support at 97.65 cents, which is the bottom of an upside price gap on the daily bar chart, Wyckoff said.
If October cattle close below the 20-day moving average around 96.34 cents, that “would confirm that a short-term top has been posted,” he added.
In lean-hog futures, trading has turned choppy recently, though bullish traders still hold the upper hand.
Near Friday’s close, October lean-hogs fell 0.95 cent to 74.85 cents a pound, down 3 percent on the week and down 6.5 percent from a contract high of 80.05 cents reached on Aug. 2.
If October futures renew a rally earlier this month, upside targets include last week’s high at 79 cents and the contract high at 80.05 cents,
A close below the 10-day moving average around 76.54 cents would “temper the bullish outlook,” he added.
Fundamentally, cattle and hog futures have been supported most of the summer by tight animal supplies, strong cash markets and surging exports. Pork carcass-cutout values, a wholesale market benchmark, hit a record 96.74 cents a pound on Aug. 24, before falling to 93.73 cents on Thursday.
Slaughter-ready steers averaged $99.24 per hundred pounds on Thursday in major cattle regions, following some trade above $100 earlier this week, USDA reported.
Hogs averaged $80.21 per hundredweight on a carcass basis on Thursday, down from $81.17 at the end of last week but up 74 percent from $46 a year ago, according to USDA data.