Shootin' the Bull about Atlas, the cattle feeder

“Shootin’ The Bull”

End of Day Market Recap

by Christopher Swift

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2/12/2024

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Live Cattle:

Cattle feeders can't catch a break.  Corn no lower, feeder futures higher and fat cattle futures lower, just keeps compounding the expense to produce a pound of beef.  Throw on top of that elevated diesel fuel costs and an up tic in the price of money, cattle feeders are believed again holding the weight of the industry on their shoulders.  One of two changes will need to be seen in order to bring profitability back to cattle feeders.  One is as simple as not bidding higher for incoming inventory.  Second is going to be more difficult as it hinges upon the consumer eating more, and willing to pay a higher price for grocers and restaurants to start ordering out in front and able to pay a higher price.  Then, the packer has to become profitable to increase the slaughter pace and then maybe the decline of the herd would be felt more than at present.  

Feeder Cattle:

Cattle feeders appear to be very slow in wanting to bid cash prices to levels the futures represent.  Futures traders are believed simply working the psychological aspect of, humans need to manage risk they assumed through physical production and the futures traders ability to program computers to cause great volatility, at times confusing humans.  I think it will take another large round of stimulus to come about before commodity markets in general find the type of buying needed to sustain a rally.  Therefore, I continue to believe that while there is so much premium available to you, there is little reason to not do something that captures the premium.  I will be glad to swap "what if's" with you to see which way you will prosper the most, regardless of outcome.  

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Hogs:

Hogs are believed finally reversing.  Not having found any reason for the rally is as perplexing as if there was one.  Nonetheless, I anticipate hogs to trade lower and urge producers and packers alike to buy the $92.00 June put and sell the $102.00 June call.  This is a sales solicitation.  The Moore Research shows a strong seasonal tendency for hog prices to move lower starting this week and running to the end of April.  

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Corn:

Grains and oilseeds remain in a bear market.  There is a great deal of hope and optimism from farmers that a bottom is near.  There is a great deal of pessimism from everyone else that suggests demand will remain weak and supplies elevated for the foreseeable future. 

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Energy:

Energy trading, above all, makes the least amount of sense to me. Diesel fuel has added another $.22 from the first of this months low.  Crude oil continues to weakening signals, yet finds strength in a second that reverses the strongest of declines.  Nonetheless, I continue to anticipate energy to trade lower, with those who purchased physical fuel months ago on my recommendations are seeing benefit today from that action. 

Bonds:

Maybe the longs have had time to readjust their positions.  Bonds made a new low today from their 2/1 high.  This also nears a double bottom of 119'00 and 119'13 made on 1/25 and today.  I anticipate bonds to trade higher.  A trade of June bonds above 120'20 will lead me to believe a bottom has been made.  Tuesday's CPI data will help to determine this.  I recommend buying June bonds on a buy stop to enter into a long position at 120/21 with a sell stop to exit only at 119/18.  This is a sales solicitation.  

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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. 

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