Live Cattle: Higher cash trades are being reported. Even with the higher futures market today, it appears traders are apprehensive of producing premium. The discovery process is growing more interesting as we see rationing taking place. There is too much production capacity for the number of animals. We saw this in the packing industry 15 years ago and are now actually seeing too much capacity in both production and processing again. So, it boils down to the desire and money available. Desire appears at it's height, the money side will be questionable as to the risk management of the borrower. There is a tremendous amount of price expanse to manage. I have no reservations in recommending the ownership of at the money put options to secure a minimum sale price. This is a sales solicitation.
Feeder Cattle: The discovery of rationing the number of producers to the number of animals to produce, continues to expand price levels for which will have to be pushed well down the line to the consumer. It is working as we have made a push to get all clients contacted while prices remain elevated, finding out that some are sitting on the sideline. As well, in our conversations, expansion is not on the minds of many. Refreshing the herd, a lateral move, is believed more the norm than holding back all heifers or buying large strings of breeding heifers. I noticed a lot of heifers in the Superior sale.
Hogs: Hogs were sharply higher with the index down $.54 at $81.05. I don't have a clue as to why hogs gapped so much higher or traded higher. With the index lower, it only went to widen the basis, leading me to recommend selling June hogs with a buy stop to exit only at $102.40 stop. This is a sales solicitation.
Corn: Corn was firmer today. Big reports Friday at 11:00am cst. Wheat was lower and March beans broke back above $10.00. I continue to recommend buying the at the money July soybean meal calls for anyone needing to fix a variable feed cost.
Energy: Energy was higher today. I expect energy to continue higher. Diesel leads the way with crude on its tail.
Bonds: Bonds and notes were plus on the day, but not by much. With commodity inflation on the rise, and no downturn in the CPI or retail sales, yet, I see little reason for bonds to move higher at the moment. Again, a lot of this is expected to change dramatically when Trump is sworn in.
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
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