Cattle:Traders were able to push April above the minor wave 1 high
of $126.30, above the irregular wave B high of $127.20 and closed
at a new high from the January 11th low. The minor wave 2 is confirmed
complete and minor wave 3 in progress. The oscillator turned up sharply
without having moved back below the zero line once it started up from the
1/11 low. A trade of the oscillator to a new high above a reading
of 2.717, and it will lead me to anticipate the upside target of $136.12
April to be met.
vertical integration increases, supply lines have to be maintained.
Especially with exports ramping up. I think that during 2017, the
industry took another step in vertical integration. As packers feel
the pull from exports, they have to have the inventory to meet the needs.
This is why I believe a great number of the stocker cattle went to commercial
yards. They know they will need that inventory. As packers
attempt to squabble over inventory from week to week, just keep in the
back of your mind that they most likely have the commitments to keep them
on guard all the time. When weakness of any kind shows up, they attempt
to exploit that. Note that even under the worse duress of the equities
decline, cattle didn’t react in a like manor. Most likely because
several in the industry knows what forward commitments there are.
Cattle:Basis is scalding feed yards now. Having gone from a very
beneficial $12.00 plus wide positive basis to a negative $4.65 is bru tal
to a feed yard. This factor should begin to pull cash feeders higher
as it is the cheapest place to find them. Although March is tethered
to the index, the other months are not hesitant to put on premium.
May set a new high in this rally and the November contract set a new contract
high. Although October did shut the gap, it is the first feeder cattle
contract month that looks bullish. More chatter is being herd concerning
the discrepancies between stockers and feeders placed. No weather
has been conducive towards weight gains the past several weeks. As
those stockers will need much more care and tend to grow somewhat slower,
they are not anticipated to be a factor this spring. What will be
interesting to see is when summer gets here and grass is green, movement
of cattle, especially feeders and stockers will slow greatly. If
demand remains, it is anticipated to keep a firm tone under feeders for
quite some time.
to talk out of the other side of my mouth. I know that anything at
anytime can cause a disruption or potential change a trend. Since
I am primarily focusing on this springs marketing’s, and have the price
movement favorable, I want to use it to secure a minimum sale floor.
With spreads widening between the three spring months, using $155.00 as
the target for action may be slightly different for some. So, sharpen
your pencil, attempt to make sales of inventory as close to the expiration
date of the futures/options contracts and we’ll start from there.
Now that there is greater than a $4.00 premium to futures, it makes it
easier to lay into a minimum sale floor and dare the cash to close the
Depending on where the CME settles wheat, there could be some new high
closes today. I believe at this juncture, rain won’t help very much
of the crop. In fact, it may only help to keep a few cattle on it
for a little longer instead of pulling them off and allowing it to go to
head. Corn was able to hold its own today and beans continue to advance.
Bean meal is the leader as both pork and poultry continue to run production
at like levels in poultry and elevated levels in pork. Although I
am not in favor of hedging beans at this level, I have no reservations
in booking a portion at this level were your basis friendly enough.
I know some elevators just keep widening the basis as prices rise.
This provides no help to the farmer and is clearly a means by which to
increase the elevators profit potential or reduce their risk.
The volatility in crude remains. Flipping back and forth a couple
of times today would have made many uncomfortable trading. However,
booking physical fuel needs at this level is not anticipated to produce
& P 500 Stock Index: I anticipate the days ranges in equity trading
to narrow sharply. I anticipate this to create a trend in an attempt
to climb back to the peak from which it fell. Whether it exceeds
it or not, I have no idea.
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
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