"Shootin' The Bull" Commodity Market Comments...
For Thursday, July 9th
Live Cattle: Traders once again blessed producers today by allowing them to market inventory dollars above current cash price. By the close, they were not as friendly to continue to do so. Equities created an oddity today that may be viewed as exhaustion. Today was the 8th day in a row of straight up trading in the Nasdaq, while the S&P and DOW were unable to exceed their early June high. This divergence is believed as topping action. The future has hurdles seen and unseen. The seen hurdles bother me greatly. The unseen ones scare the ____ out of me. The issue going forward has little to do with cattle or beef production. The issue going forward will be the continual changes in lifestyles that are anticipated to impact consumer discretionary spending habits. If kids don't go back to school in the fall, a parent may have to stay at home and that is potentially a job lost. As markets seek equilibrium, so to does the consumer. I think the silent majority is speaking with their discretionary spending habits. Were beef movement to slow, that to me would be a key signal the consumer is, or has changed discretionary spending habits. There is a lot being asked of the consumer. Most of it very conflicting, confusing, or creating significant strife. The consumer does not tend to spend freely when conflicted. At this time, the above comments leads me to not want to assume significant risk when supply is ample, processing capabilities ample, and the consumer questionable.
Feeder Cattle: Some are bidding up for inventory. I can only assume that the answer for why is one of two. Either they have laid off their risk with the higher fat futures, or they think the cash market is going to rally sharply going into the fall of the year with elevated beef production and a consumer believed beleaguered by multiple issues. It doesn't matter. The more a feedyard, or whomever, pays up for feeders, they are merely narrowing margin as cash has yet to move, and futures offering the only profit potential. Cattle placed today will hit right at Christmas. If you are one bidding up for inventory, make sure you have it hedged or forward contracted.
Lean Hogs: Hogs were higher today.