In my opinion, spreads this week between 7 #'s, and anything heavier, widened starting margins to egregious levels.  Especially with the sharp discounts of futures in both fats and feeders.  As this procurement structure is nothing new, we'll have to wait for the hindsight to see how clear foresight was. Futures continue to be volatile and produce exceptionally wide daily price ranges.  Sometimes, multiple times through the day.  The first 2 trading days of the past 6, produced a decline of $21.85 via the August feeder cattle.  Traders were able to recoup approximately 50% of this decline this week before starting the erosion over again.  Friday's lower trade began overlapping the first move up and this led me to believe it was only a 3-wave correction of the initial decline.  Hence, I anticipate the next most probable move to be a trade down to $334.37 August, were it to be mild, and potentially $320.87 if moves 1.61 times greater than the first move down. $21.85 x 1.618 = $35.35.  $35.35 - $356.22 = $320.87.  The $356.22 price is the high made on 5/20.  Were this to materialize, it would create the neck line for the further development of a head and shoulders pattern. 

The industry is believed at a turning point for which the producer hasn't quite stopped the current production scheme, but seemingly the rest of the beef eating world has shifted in a manner that is not necessarily supporting cattle prices.  Potentially more evidence of congestion at the center of the plate.  An interesting note is the difference between a top and a bottom.  Bottoms can tend to drag for long periods of time as it takes time to reduce large quantities of inventory or lower production to levels more suited to the demand.  Tops though can be pointed.  More often than not, a high price will introduce heavy competition, or increase production to meet the demand.  When combined with a desire to capture higher prices, they can fall dramatically.  Cattle have recently traded counter to this theory as price has not enticed expansion nor has it created enough competition to sway.  So, another abnormality to add to this time frame of production. Which suggests to accept this time frame as abnormal, with any form of normal to return would not be anticipated to produce the type of price ranges currently experienced. 

Filled with abnormalities already, cattle trading counter to the seasonality may not be as far of a stretch as many think.  The March through May lower seasonality was an oddity this spring as we made new highs in the futures markets while in progress.  The current lower trading is still believed a part of the lower seasonal tendency.  The next seasonal tendency is higher and starts the first of June and runs into the end of July.  It will not surprise me to see the lower trading bleed into next week. Then, depending upon how much lower the market trades, do we expect the creation of the right shoulder; that would take the industry through the seasonal tendency higher and summer videos?  If the right shoulder does materialize, it will provide another marketing opportunity, but maybe not a new contract or historical cash high. There is one other factor.  That being, I can be wrong twice.  One, this may not be the top, and prices continue to move higher. Two, I could be wrong and prices don't consolidate and give producers ample time to make crucial decisions on how to approach the future.  If wrong about the second part of this, prices may have a tendency to collapse as they did just 9 months ago. 

Grains were volatile as well, but ended the week soft as a kitten.  Ample rain across the corn belt, and here in the south, will improve all that was privy to.  Wheat was a huge disappointment.  After the limit up day, it appears the rumor was out and it was time to sell the news. I continue to anticipate wheat to trade higher, but it appears to need to bottom first.  Energy was lower on the week as well, but still not out of the woods by any stretch.  I continue to anticipate energy to trade higher.  Were you privy to the lower trading of diesel at the retail level, I recommend topping off farm tanks.  Bonds ended the week higher as quantitative easing and excessive government spending continue to push inflation higher. Wait? Shouldn't that be just the opposite?  Shouldn't rates be moving higher to counter the inflation?  Yes, they should be, but the current administration wants the inflation, believed trying to inflate their way out of debt, or potentially keep equities from moving lower, as it seems there is a large long position held by the President and most all members of the Senate and Congress.  Commodity inflation subsided a little this week, mostly from energy.  However, by the close on Friday, just about every commodity was lower.  Equities continue to be the benefactor of quantitative easing and government spending. The President has become accustomed to posting inflammatory tweets, believed to intentionally move the markets, as the content has no bearing on any resolve.  Note as well that there is rarely a follow up if desire was achieved. Nonetheless, this is the trading environment the world is in, and we have to deal with it, whether we want to or not. Neither you or I know what intended or unintended consequences may arise from the current environment and administration, leading me to have little reservation in suggesting you spend the weekend detailing how you will manage the potential for adverse price fluctuation, in ownership of the most expensive cattle inventory in history.