Shootin' the Bull about no rest for the weary cattle feeder.

“Shootin’ The Bull”

End of Day Market Recap

by Christopher Swift

​

7/22/2024

Live Cattle:

The on feed report had little to show that we didn't already know.  The numbers on feed continue to be greater than anyone expected them to be, as well as beef production going positive was never mentioned by anyone earlier in the year.  The agenda though has started to produce a hum in the back that is anticipated to grow steadily going forward. That being the beef/dairy cross.  While not as big as the beef cow herd, it offers a couple of factors unattainable in beef cattle production.  The first and foremost is herd control.  The dairies don't have thousands of owned or leased acres of land for cattle to graze on.  The other is the slow growth of the product, suggesting that once in place, they just hum in the background producing animal after animal with few limitations of weather impacts.  Droughts, floods and freezes can devastate cattle production in some areas.  I have not heard of many dairies with similar issues. Nonetheless, fat futures ended a little higher today. A trade above the July 5 high will lead me to expect further upside trading.  A trade under the July 10 low, and it will be anticipated a wave 1 and 2 complete with a wave 3 down in progress. I continue to recommend doing whatever it takes to get a minimum sale floor under you cattle.  I recommend a long, at the money, put option on fat cattle. This is a sales solicitation.  If prices move lower, you will need every penny due to the high input cost of the feeder. If prices move higher, the option premium would depreciate to zero and you would hope fat cattle prices are still higher.   It is not that I think prices will  move higher or lower.  It is that input costs are so high, you need every penny.  To give up the next $4.00 to $5.00 to premium for a put option may seem as throwing money away.  I view it as keeping a bad situation at the onset from getting worse.    

​

Feeder Cattle:

​Cattle feeders are believed speaking volumes with the lower bids, creating a softer feeder cattle index. Futures traders hung the cattle feeder at the opening with higher feed costs and higher feeder cattle futures.  By the close, traders had helped them out a little, but not by much.  The feeder cattle index has begun to overlap previous highs. The intermediate wave 3 of 5 has been overlapped by crossing back under $259.04, the wave 3 of 5 index high.  A trade under $255.08 will suggest an exceeding of the wave 4 of 5 helping to confirm a top is in, at least for a little while.  I recommend you use the close proximity of basis still left to do whatever it takes to get a minimum sale floor underneath your cattle exposure.  This is a sales solicitation.  

​

Hogs:

Hogs were firmer today.  The lean hog index was up $.44 at $89.71.​​​

​

Corn:  

Corn and beans rallied today.  I am unsure why, but potentially just ran out of sellers at the lows.  The bear market remains, and with technical indicators at new lows and prices at new lows, it leads me to expect some sideways to higher trading with a new low in price to come, but maybe not a new low in the technical indicators.  ​​

​

Energy:

​Energy was mixed today.  I expect energy prices to soften greatly in the coming weeks.  Especially if we see another report as last Wednesday showed, where crude stocks were drawn down, but not diesel or gasoline.  This suggests refiners are cracking too much, or the consumer is not burning enough.  We know for months on end, diesel fuel has been losing ground to gasoline and now both appear to be starting bear markets. ​

​

Bonds:

​Bonds were lower today.  The volatility has increased in bond trading.  No wonder with such a political zoo open to the public, watching all the animals out of their cages, fighting with one another. I think it hard for anyone to get interested in owning bonds during this excrement show.  Nonetheless, I expect bonds to move higher.  

​

​

This is intended to be or is in the nature of a solicitation. An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of the margin deposits.  You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources and other relevant circumstances. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. 

Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.