Live Cattle: I'm looking forward to CattleCon being in Nashville this year, seeing friends, and meeting new ones. Although I won't have a booth there, I will be present on Tuesday, February 3rd for the day. If you have a moment during the day, send me a text as to where you are in the show and I'll find you. If you would like to set up a time now, please do so and we will find a place to talk. My cell phone number is 615-828-5891.
A lethargic trading day as human traders are believed anxious about what may come next and the computers simply doing what they do best, spoof traders into making decisions at the worst possible time. Packers appear content to sit with the inventory around them and not own a bunch going into a major winter storm. Cattle feeders continue to deal with reduced profit margins and grossly egregious projected breakevens. It has been noted the cattle feeder is being cautious to not average in the near historical high for feeder cattle into their current mix. I also believe that the south may have added inventory in an attempt to remain relevant in the cattle feeding sector.
Feeder Cattle: Backgrounders are finding themselves in an inverted price spread to feeders. At present, they are paying the highest price for anything less than 850# with all contract months discounted to one another. The feeder cattle futures are their futures contract to market into and the discounts are believed creating like, if not worse, projected breakeven prices than cattle feeders have subjected themselves to. Open interest is nearing 80K contracts. I can't recall the last time it was this high, suggesting a great deal of interest is in the feeder cattle market. At current proximity to historical highs, I recommend you do something to mitigate risks being assumed to produce a pound of beef. This is a sales solicitation.
Corn: Traders are believed creating a wave 4 correction. A wave 5 to a new low is anticipated. Were this to materialize, I would be in anticipation of a rally that retraced 50% or more of the move down from the 12/26 high. If unfolds, this may be the opportunity needed to make an extremely difficult marketing decision. Cattle feeders will be urged to top off feed bins for the coming spring and summer. Were there to be any issues with planting, these lows may prove beneficial when having to deal with the massive price fluctuation of cattle. Beans continue to produce a correction. It is very weak in consideration of price recovery, and appears to be marking time more than anything. November beans have touched the 34 day moving average at today's high. A close through it would help to suggest maybe some higher trading, but with the corn looking to make a new low, beans may do so as well.
Energy: What a day in energy trading. All were lower to sharply lower. Volatility is high in energy trading, but seemingly, there remains an undertone that is keeping energy prices firmer than weaker. Diesel fuel is by far the leader in higher trading. Today's lower trade pushed March back under $2.30. Although I am not bullish, topping off farm tanks may be of benefit were a bullish factor to present itself.
Bonds: Bonds are firm, but not much more than. For the moment, it appears inflation is ticking up and an acceleration of desired.
Christopher B. Swift is a commodity broker and consultant with Swift Trading Company in Nashville, TN. Mr. Swift authors the daily commentaries "Mid Day Cattle Comment" and "Shootin' the Bull" commentary found on his website @ www.shootinthebull.com
This is intended to be or is in the nature of a solicitation.” Futures trading is not for everyone. The risk of loss in trading futures can be substantial; therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not indicative of future results, and there is no assurance that your trading experience will be similar to the past performance.
