Nashville - Delray
Commodity Futures and Options Trading
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 tried to push futures higher, but couldn't quite get all the months to stay plus on the day. Boxes are on the verge of trading back under the $280.00 level. This price is approximately $25.00 higher than the box price was in 2014. I think the packing and cattle feeding portions of the industry have done a good job of managing the numbers on feed and slaughter rate to keep ample inventory available to the public, but at the higher price to keep rationing in place. Larger cattle are anticipated to come that will help to offset the decline in volume. With retail prices high, this should keep the consumer from increasing consumption rate or willingness to pay. All in all, it appears the industry has worked to keep beef and cattle prices from levels that would be anticipated to quell demand. Wednesday's move from the Fed will help to determine how much more money will cost to borrow and all factors related to. My expectation is they will raise rates by a quarter and keep with the inflation fighting theme.
Considering how high some believed feeder cattle would get, or how low the volume of sales would be, neither appears to have met the expected outcome yet. Cattle feeders are believed to have practiced great reserve for pricing incoming inventory. This will help greatly in keeping some profit margins. Especially with it anticipated for feed costs to soften further. I view the price correction an opportunity to adjust what did not like when prices were at contract highs, and do more of what you did like. Those looking for another run in the futures may have to wait until the Fed makes their move. Higher prices of cattle will only go to need more working capital, and if that capital costs more, less margin will be achieved, or higher input costs to overcome. Money being an input cost.
Hogs were soft today. The index was down $.46 at $79.55.
Novy beans, no longer in the teens. Grains are moving lower today after attempting a rally early this morning. Expectations of improved weather and profit margins still available to farmers leads me to anticipate a sizable crop to go in the ground this year. A trade of December corn under $5.50, with beans now under $13.00, leads me to anticipate an up tic in farmer selling.
Energy pricing was volatile today, but seemingly directionless. I lean more towards energy moving lower than higher. All markets appear to be having a slightly higher day. I think this may be in response to a hope the Fed will not raise rates, and send a "buy" signal to the markets. I think they will raise rates again, and would prefer to sort through the rubble for something to rebuild on than send every market up in inflationary flames.
Bonds are down today. The most recent price action leaves all scratching their heads. Tomorrow's Fed action is anticipated to induce further stress upon markets and may or may not expose further economic weakness. Equities are believed marking time with more downside trading anticipated.