Shootin' The Bull
"Shootin' The Bull" is a daily futures and commodity market commentary, written by Chris Swift, commodities broker and founder of Swift Trading Company in Nashville, Tennessee.
With over 30 years of experience in the commodity futures industry, Chris's technical and fundamental analysis is provided for his clients and readers in an attempt to make a more informed trading decision.
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“Shootin’ The Bull”
Commodity Market Comments
by Christopher B. Swift
Market action of the financials continues to have me more than spooked. I ask this question, "are you comfortable owning the highest priced inventory and feed costs in 7 years going into this fall?" Of all the fundamentals bullish or bearish, the above is the only question you have to answer and only to yourself you have to answer it.
How comfortable are you going into the fall of the year with cattle feeders owning the highest priced inventory and feed in the past 7 years? What assurances have you been able garner that cattle feeders will continue to bid the prices they are currently, or the futures traders hold the premiums into expiration? I urge you to ponder this.
Not today. I have no clue as to the fundamental's or what they may entail for price of hogs.
Grains had a very peculiar day today. Early morning gains were quickly erased on the reopening. The US dollar was weak against the major currencies as well, until 8:30. At 8:30, the US dollar strengthened sharply, sending all commodities down on the day. At day's end, grains had fought back to close off the lows with beans the strongest closing plus on the day. I do not take today's market action to be that of the grains, but of outside market forces. Therefore, I'll see what Thursday brings before I made many more decisions. At present, I remain very friendly towards the grains, but am more than aware I am running out of time for weather issues and upcoming harvest supplies. Corn has yet to decide on a direction and beans have already tipped the scale to the down side by breaking out of the triangle. Were strength to be found now, I would not only anticipate buyers to return, but could help be propelled by short covering as well. I would have to assume some farmer sales were made when beans broke the trendline. MSW continues to hold its own. I recommend rolling anytime it becomes advantageous to one day over another. There is little squeeze potential in the September contract. The September of '22 contract month could be the squeeze were a third year of the drought continue, or worse, push further east and south.
Know that any shortages in this years crop won't necessarily be as significant until you get into the spring and summer of next year. Regardless of how short this years crop may be, at harvest there will be ample. Keep this on the front burner. If at harvest there are fall lows, consider using those fall lows to own July of '22 or '23 call options.
Energies were lower again today. Natural gas is higher. The lower diesel fuel today continues to take some of the pressure off previous recommendations to not top off farm tanks. I anticipate energy to continue lower and would not want to have to make purchases until at least the 7/20 low is exceeded. On the October contract, that price is $1.9642. A trade under that will lead me to anticipate a lower trade, but that is when I would begin topping off tanks or potentially booking fall diesel needs were prices of benefit to your operation.
Natural gas continues higher. The need for electricity generation still has another 60 days in the west before some cooling may take place. Until it begins to rain, there is no way to know how long it will take reservoirs to fill to levels that would allow for electricity generation. I anticipate Natural gas to trade higher.
US Treasury Bonds: