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”
End of Day Market Recap
by Christopher Swift
Traders appear to be all keyed up on the winter weather that is transpiring in the winter time. Multiple analyst's have commented on the storms movement and how this will help cattle prices. It may, but think about this, since winter will be over in just a month or two, what will be the next event that will have to materialize to push cattle higher? If the market needs events to push prices higher, is that not a sign that the market isn't that strong to begin with? I'm just playing Devil's advocate due to so much bullishness being placed upon a storm. Tuesday's inventory report is not anticipated to have much impact on the fats. It may have some impact on back month feeder cattle, but the same question pops up there, who is going to pay for all of those new high prices? Nonetheless, with February and April already having been hedged, I am looking at the June and August contracts next. I recommend marketing June and August above $160.00. This is a sales solicitation. Traders pushed some deviation between June and August today. This may just be that June's hedges are placed before the August.
The storms must not be slated for areas of feeder cattle. Maybe it only takes weight off fat cattle. Again, seemingly there is a great deal of weight being put on this winter storm in the winter. I understand how bad you want to know if cattle feeders will bid up to $212.00 or higher for your inventory, if packers will pay the $187.00 fat price a $212.00 steer equates to, if the grocer or restaurant will pay the box price reflected by a $187.00 steer, and will the consumer pay the retail price for which a box price has profited all of those below in producing that pound of beef. Unfortunately, I just don't know. Here is what I do know. If you can live the consequences of your actions, then you are currently presented with a basis margin that seemingly will be profitable. If you can not live with the consequences of your actions, then wait until the sale date and take what someone gives you. If that is unacceptable to you, then consider marketing on your terms, at the price you wish, and live with the consequences. Boiling this down to the nitty gritty comes to whether or not you can live with your decisions. I think it one thing to hope for the best and be pleasantly surprised, and another to have opportunity provided to you for which you do nothing about. At this juncture, most of the pleasantly surprised is seemingly already in the market.
Hogs were soft. The index was up $.12 at $72.64.
I made recommendations today to sell more December corn, November soybeans and July Minneapolis spring wheat. This is a sales solicitation. I recommended maintaining all of the previously recommended short positions in these markets. This is a sales solicitation. The November soybeans have two hurdles to cross before I give up on being short. The first is the low of $13.79 made on 1/5. If this is exceeded, it won't help my cause. If $14.05 is exceeded, it will void the current wave count and push positions to flat. I will not have any grievances over having recommended booking new crop corn or beans with your elevator. December corn will have to be above $6.06 before it would spur my attention. The July spring wheat needs to hold under $9.25 stay bearish. I think the grains markets are betwixt and between when discussing needed production. The US crop was short and the South American crop large. When South America begins harvesting, or Argentina receives more rains, I would anticipate beans to move sharply lower. Corn is anticipated to suffer due to low exports. With China anticipated to buy corn from South America, it leaves fewer trading partners that could take the quantities that China could.
Energy took a blow to the arm today. The lower diesel fuel sparks the desire to top off fuel tanks, but not to book spring needs yet. Were diesel to fall under $2.85, it may send a signal to sell, rather than buy. With China and India's desire to grow, I anticipate a stout bid on oil prices going forward.
Bonds were soft today. I don't expect much volatility until the release of Wednesday's FOMC meeting. I anticipate bonds to trade higher as potentially the Fed's verbiage may soften a little after such aggressive hikes and the housing market feeling every tenth of a percent increase.