In my opinion, what a week of price volatility and expanse.  While not one for the record books, it is noticeable. Energy is believed the culprit and without too much warning, or at least attention paid to, it has created an outside market influence that has nothing to do with the shortage of cattle.  It has all to do with rising input costs, for which with an already wide negative margin at the start, increased input costs will be of detriment, even if cattle prices don't move lower.  It simply points to the obvious; cattle prices have to go up and cannot sit still or go down.  The current events have already pushed retail gasoline prices sharply higher, in days, with further increases to approximately $3.40 retail on $2.70 plus futures.  Diesel fuel took a back seat to crude by Friday as shipping has been halted in the Straits and oil production in the Middle east curbed greatly, due to lack of storage facilities and tanker movement.  This is creating a shortage on the front end and glut in the back. In less than two weeks, just about everything purchased will have some increase in price to offset the rise of energy.  Clients have already expressed to me the increased cost of movement for next week. 

Cattlemen appear to be disregarding all other aspects of the supply and demand equations to focus solely on the supply factors of, not enough cattle and too much production capacity. The reliance upon the next producer to pay even higher is great. That is because the consumer, grocer, restaurant, packer and futures trader have all made some shift in buying practices, with cattlemen still paying top dollar at present. As it is unknown the extent of this current event, or the unintended consequences of, cattlemen will have a great deal to contend with going forward besides "there just aren't any more cattle."  Due to the significance of the current events,  my inability to predict when it will conclude, or how long it will last, leads me to recommend being overly cautious in bidding higher.  On the flip side, were the situation to deescalate over the weekend, which I don't think it will, but if so, could lead to as sharp of a rally as the opposite would a decline.  Hence, the exposure to basis risk is on the front burner and turned on high, whether prices are higher or lower. 

Grains and oilseeds were higher as they are a component of energy.  Gasoline has been the lagger of this rally because diesel fuel was the product in demand and higher gasoline prices tend to deter consumers from driving needlessly. Soybean oil has benefited the most.  Soybeans have been dragged uphill kicking and screaming, but have made new highs from earlier lows of last year.  Farmers are benefiting in leaps and bounds from an issue that has not been anticipated, and were it to be resolved, would most likely see corn and bean prices plummet.  So, while new highs are being made in the new crop corn and bean contract months, give great consideration to owning the at the money puts to cover a percentage of marketing needs.  Out of the other side of my mouth, cattle feeders are seeing input costs, outside the price of cattle, rise sharply.  While it may be way behind the eight ball to begin topping off farm tanks or booking fuel, booking corn calls, to keep from something else taking place, is still recommended.  Bonds ended the week lower.  The sharp rise of commodity inflation offset the weaker unemployment report and flat retail sales.  Higher interest rates, fuel, and feed are input costs few have anticipated to have risen as sharply as they have, in such a short period of time, leading me to believe producers will be impacted by this more severely than had these price rises been anticipated. I am in hopes that previous recommendations of topping off farm tanks, booking fuel for planting needs, and buying the July corn call options didn't fall on deaf ears.