"Shootin' The Bull" Commodity Market Comments...
For Thursday, April 15th
Live Cattle: The literal meltdown of price has produced minimal waves to count. The hourly oscillator is a huge semicircle under the zero line. The extent of the move, and reconfiguration of the basis in a short period of time, may lend to a sharp corrective rally. How that unfolds may help to decipher the next most probable move. At present, a 3 wave move higher, or maybe sideways trading to see how well the higher priced product moves through the grocery shelves could be in store. However, with the weekly continuation chart literally needing a wave 2 correction, I anticipate June and August to move to approximately $110.00.
Feeder Cattle: At this point, it is believed that most know the plight of the cattle feeder. Even a roaring advance in fat cattle prices would only go to stem the flow of liquidity, or potentially recoup input costs. Basis is converging with cash having moved slightly higher and futures lower. This weeks sharp gains in feed costs are believed to have begun impacting optimism when procuring inventory. Like the fats, the melt down has come with few corrections and they have been mild. Further liquidation is anticipated. Drought is a key factor and seemingly will set a precedence in 30 days. Rain in the plains will help keep more heifers retained, while drought may force them back to the kill cycle. This issue is most likely what is taking the fluff out of futures. There may be a smaller pool of inventory in the second half if the heifers stay. That may well have justified the $24.00 premium at one time. Today though, it is only justified to $14.00 premium. Lastly, the same weather impacts on the heifers will be to some extent the corn crop to. This would only go to exasperate the situation were it to be drought.
Lean Hogs: Hogs were limit down today. I anticipate hogs to continue lower.
Corn: Corn, beans, and wheat are believed in bull markets, supported by demand for livestock production, a weak US dollar, a poor start to the SA corn crop, and an easy money policy by most governments around the world. Especially China. My best guess is for a major wave 5 to be made in corn approximately $.40 to $60 higher than today's close. This may last up to just before the last planter leaves the fields. I anticipate no trouble at all getting the crop in. It will be the germination and pollination of that will be crucial. Traders may form a significant sideways trading range into a portion of the growing season until determinations can be made. Then we just see what those factors are at the time. I think that even when it does top, the price retracement may not be by very much.
Crude: Energies held their own today after Wednesday's gains. Metals were higher as well. I look for this new surge in buying to push energy prices to new contract highs and above $70.00 per barrel.
US Treasury Bonds: Bonds met the upside objective of 158'00 today and proceeded to go to 159'00. At the close though, traders had pushed it back to 157'29. I do not know if this is the top or termination of the wave 4. I do believe it is a price level to begin entering into a short position in anticipation of a wave 5 decline to new contract lows. This is a sales solicitation.