"Shootin' The Bull" Commodity Market Comments...
For Thursday, September 29th
Live Cattle: Shorts taking profits and longs, dabbling at picking a bottom, are believed to have sparked todays rally off the low. As equities plummet, it offers little hope that this is not much more than a dead cat bounce. Packers are cutting back on kills I read this morning. They will do this in an attempt to garner a better price on beef. Unfortunately, this won't produce any incentive to bid higher for inventory as the purpose is to widen their margins, or at least slow the erosion of. I recommend maintaining previously recommended put options. This is a sales solicitation.
Feeder Cattle: It has taken less than 6 weeks to peel off $15.75 from the October contract. I do not believe today's low to be the bottom. Maybe "a" bottom, but not "the" bottom. At best, with the lowest low in price being confirmed with the lowest oscillator reading, I think were any rally to materialize, it would be a wave 4 correction. It is still too early yet as the low was just made today. The index is anticipated to trade lower. Under $176.82 and it will appear the index is resuming the downward price action. There is believed support on the index at $169.00 and then not much else until $150.00.
Lean Hogs: Hogs were narrowly mixed with the index down $.81 at $95.60.
Corn: Quarterly small grains stocks report is out on Friday at 11:00. The Chinese government issued a statement today suggesting they will attempt to intervene in currency transactions of supporting the Yuan and selling US dollars. Were the selling of US dollars to take the form of buying US grains, the two fold event would be perceived as bullish grains and produce greater US inflation. Both of which is perceived beneficial to the Chinese. Strapping the US with more inflation won't hurt China and would have to believe that the pork and poultry that US corn and soybeans feed is much more palatable than a chewy US dollar. While this is not seemingly market moving information yet, it could be soon. Nonetheless, corn and beans continue to hold their own. The aspect of China supporting their Yuan may have me to reconsider being short beans. This won't change my mind in marketing new crop beans, but might have me considering as to whether re-owning them in a long call option is advantageous or not. What remains the most interesting to me is the current price of corn, wheat and beans, at harvest. These price levels are rarely achieved, much less at harvest. Wheat continues to be a wild card and will be for some time.
Energy: Energy prices have been volatile today with some gains made, but a slightly weaker close. Diesel fuel gave back a nickel today. I am not quite convinced yet of a direction for diesel fuel. Hand to mouth at this level and maybe top off tanks closer to $3.00 were it to get there.
Bonds: Now we have a really interesting situation. Apparently pension funds were going underwater quickly in England so they postponed a gilt sale to help stabilize the interest rate market. Adding fuel to the inflationary fire. Then, today, China announced they would be supporting their Yuan. Adding fuel to the inflationary fire. This is anticipated to impact the US dollar and potentially we could see China spend those dollars in the US on grain. This gets rid of the dollars they can't use and buys US grains and potentially meats they can use. Here in the US, we are dealing with an incognizant President and a VP that believes the US supports North Korea while standing on South Korean soil. As well, our own border situation, for which nothing is being done about the dilution of the economy, continues with no abatement.