“Shootin’ The Bull”

End of Day Market Recap

by Christopher Swift

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5/13/2024

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Live Cattle:

Nearly a $2.50 range to end up down a half dollar on the day.  I didn't read anything over the weekend that would suggest either the cattle feeder, packer, or consumer had any inclination to pay higher for anything.  This morning, the futures traders tried to converge the basis, but at the close, further divergence was seen.  With packer margins in the red, attempting to find a path to higher cattle prices is difficult.  There has been no change in the agenda with the goal believed being achieved.  I think there are some waiting for a powder keg to go off, produce some form of stupendous price, that will suddenly make all the high priced cattle seem cheap.  While this may come about, and no doubt the supply issues suggest there is powder in the keg, I think majority understand that if the keg blows, it most likely destroys more demand than fixes the cattle feeders woes.  

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Feeder Cattle:

A near $4.00 range was created in a few contract months of the feeder cattle.  Computer traders were either anxious to get the week started, or maybe a few humans were, but whom ever wanted futures higher.  As the day wore on, most all contract months were lower on the day close to the close.  At the close, traders pushed them slightly higher, but nowhere near a level that would have caused anxiety from being short.  Feeder cattle prices are too high, to profit from, in a traditional feeding manner. Cattle feeders were pummeled today with higher feed, feeder, and fuel prices, while fat cattle prices fell.  The expectations for cattle are very well known by all.  That being, the liquidation is nearing an end.  Expansion may or may not become noticeable by years end, but with the agenda in place, the repercussions from are not expected to be nearly as dramatic as the anticipation of, seen in '23 and to some extent '24.  Further triangulation of price is expected, but it would not surprise me to see the triangle widened a little in the feeders to the next up trend line, drawn from a Gann Fan program.   

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Hogs:

Hogs were lower as convergence of basis continues.  I expect hog futures to continue to trade lower to converge with the index. 

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Corn:  

Grain traders are trying their best to make big price swings out small changes in the WASDE report. Wheat appears the only one attempting to rally.  Corn and beans, especially new crop, appear vulnerable at these price levels with no more issues at hand in the US.  Farmers have some price to work with and a great deal of options in front of them as to how they wish to handle their marketing's.  Seemingly, the issues at hand are believed short term, and weather driven.  Hence, any improvement would suggest traders to be quick in selling grains.  If they persist, then it may be percent calculations as to how much may or may not have been lost.   For South America, this means the most issue is the unharvested beans in jeopardy.  For the US, it may mean some replanting, but you must realize that every kernel or seed that didn't get washed away, will have a great start.  I think replanting river or creek bottoms will be the least of this years growing worries.  

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Energy:

Energies are believed in a bear market.  I expect energy prices to continue to move lower.  This weeks economic data will help to decipher the next most probable move. 

Bonds:

Bonds were firm today, but not by much.  I expect bonds to move higher with this weeks economic data anticipated to give them a little push.  

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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.