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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.

The Mid-Day Cattle Comment is a market commentary written during trading hours, providing subscribers with pertinent, real time information to help readers make a more informed trading decision. 

 

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“Shootin’ The Bull”

End of Day Market Recap

by Christopher Swift

9/28/2022

Live Cattle:

Premiums continue to erode in the fat cattle futures.  While not at an alarming rate, but potentially making those that paid the highest prices for feeders this summer a little uneasy.  This most recent selling is believed in anticipation of weaker beef sales going forward.  Maybe they won't be, but it is difficult to ignore the inflationary pressures being applied to consumers, causing significant shifts in discretionary spending habits.  Cash markets at present are holding firm.  At present, futures are merely converging basis.  One has to watch closely for the first signs of packers obtaining cattle at lower prices.  Were this to start, as it has in the feeders, then futures would be anticipated to pick up some steam to the downside to keep from cash moving too far away from futures.  Any movement lower in cash keeps the futures the highest price to market into. 

Feeder Cattle:

If you are in need of marketing inventory, do it today, as it is the highest price available to you for the remainder of this year.  With the cash market now starting to push lower, cash and futures will jockey back and forth.  If futures get too much away from cash, then it may snap back a little.  With cash falling as well, it is a guess as to where cash will fall to.  At present, the nearest point to fall to would be the July 25th low of $169.02.  That is the wave 4 of the next lesser degree.  This area could be a slowing point as futures are within $6.00 of this low and a $7.00 drop in cash would not be out of line. Then, we wait to see what input costs have done, and how well the economy is handling excessively higher rates in a very short period of time. 

I recommend to cover short calls in this years remaining contract months if nears the $170.00 level and sell puts at the $160.00 level to bring in more premium and swap from a fence options hedge to a bear put spread hedge.  This is a sales solicitation.  

Lean Hogs:

Hogs were mixed with the index down $.58 at $96.41.

Corn:

Just the slightest reprieve in financial markets and commodities move higher.  I have heard of some great crops being harvested, but nothing yield wise over last year.  I continue to anticipate corn to move higher, beans lower, and wheat the wild card.  

Energy:

Energy prices soared today.  Crude was up just shy of $4.00 with diesel fuel leading the way, up $.20, a 6% increase in one day.  This appears as a reversal or some of the wildest volatility seen so far this year.  I am leaning towards a reversal, and frustrated at the failed breakout to the downside having fooled me once again.  

Bonds:

Well, after a 22 point mutilation of bond prices, a 732 point loss, totaling 17% of S&P equity indices loss, the bulls are dead and bears rummaging through the carnage. Highly overleveraged debt related trades are overwhelming owners due to the shear price decline in such a short period of time.  Many are not of age to have ever dealt with inflation, as for the past 13 years, inflation has been going down.  A college graduate in 2009 had little to no experience of inflation or what it can do.  A lot of these individuals have been able to amass significant followings and achieved great performance under deflation for which inflation is now exposing significant leverage acquired.  The speed in which rates have risen are believed to have produced a "deer in the headlights" stare from some.  Nonetheless, the selling slowed today and is allowing some to be able to trade at yesterday's levels.  All of this, not before having made a new contract low in most all debt instruments and equity indices this morning.  

This is intended to be or is in the nature of a solicitation. An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of the margin deposits.  You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources and other relevant circumstances. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.