"Shootin' The Bull" Commodity Market Comments...
For Wednesday, January 21st
Live Cattle: Trading appeared a little void of traders today, at least the human ones. Computers were quick to fade rallies and buy dips with few humans believed knowing what to do. Of the only factor of significance today was the continuation to pay more for feeder cattle than their fat counter part. I think the consistency of the on feed number, and length of time on feed, suggests cattle feeders are in no hurry to average in higher feeder cattle prices to their current mix. At one time, the cattle feeder was noted as having the weight of the world on their shoulders, but today, I think there are some instances where backgrounders have paid so much for lighter inventory, and the discounts of feeder cattle futures, may well have some in a worse projected breakeven than cattle feeders. I recommend maintaining all previously recommended hedges and continue to believe the basis in fats to be slightly advantageous to the April contract, and not all that bad in the back months to lock in a minimum sale floor that may or may not be available when physical marketing takes place. This is a sales solicitation.
Feeder Cattle: Basis narrowed cautiously today with both sides of unchanged having been traded. The wide trading ranges in the day, and multiple times to and from, are believed computers and not humans dictating the bulk of trading. By the close, futures were able to stay plus, narrowing basis a little more. Cattlemen are believed convinced the well known shortage of supply will continue to encourage someone else to pay an even higher price for in the future. Everyone else that trades and consumes beef, seem to have a slightly different opinion as reflected by the box beef price and ability to move quantities at that price.
Corn: Beans were able to stay plus on the day. Bean oil is the reason why. Bean oil is a bio-diesel product that competes with diesel fuel. In the past 3 weeks, diesel fuel has risen $.30 or more, suggesting a demand for, and therefore a demand for the alternative. This is of great benefit to hog and poultry producers as you have to crush beans and you are going to get both meal and oil. The demand for the oil is creating a glut of meal and now it is trading back under $300.00 per ton. Corn couldn't hold on the gains from earlier this morning. Making no decision at all is a decision and leaves one subject to the consequences beyond one's control. I know how difficult it is making a decision under duress, but solidifying some objectives within your control may help you in the future, were prices to change abruptly.
Energy: What a day in energy trading. All were higher, but diesel fuel led the way by leaps and bounds. I am unsure whether this is a refining issue or elevated demand for. Therefore, I recommend topping off farm tanks until more information can be garnered.
Bonds: Bonds are higher, but seemingly only a minor correction of Tuesday's huge sell off. A spurt of buying in the late afternoon made the high of the day, after progress was seen in the issues over Greenland, but that rally is expected to fade as inflation continues to move higher, as reflected by the Redbook sales released this morning.
Christopher B. Swift is a commodity broker and consultant with Swift Trading Company in Nashville, TN. Mr. Swift authors the daily commentaries "Mid Day Cattle Comment" and "Shootin' the Bull" commentary found on his website @ www.shootinthebull.com
This is intended to be or is in the nature of a solicitation.” Futures trading is not for everyone. The risk of loss in trading futures can be substantial; therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not indicative of future results, and there is no assurance that your trading experience will be similar to the past performance.
