Live Cattle: There isn't a great deal to discuss as the current events are difficult to assess, making all forward projections even more difficult. Soaring input costs are believed second only to the plant strike in Greely. The Moore Research suggests to anticipate a weaker time frame into the first week of May. Basis spreads are anticipated to remain wide, and a subject of contention as cattle feeders have assumed the first large loss per head of the previous highest priced inventory ever placed in October '25. There could be as many as 2 more weeks of worsening negative margins unless the price of fats soar. A combination of having paid more for inventory at placement in October '25, and a lower cash price this week and next, may have some of the previous projections made when placed come to fruition. I recommend maintaining all hedged positions.
Feeder Cattle: Basis widened further, exposing producers to further basis and price risk. With prices following closely to the Moore Research, and a belief that prices will triangulate, leads me to anticipate price action continuing to soften into early May. In the interim, I will expect a great deal of price expanse and volatility with downside projections to stop just shy of the November '25 lows. This will keep the triangulating pattern together with expectations of the pattern remaining for the year. Hence, every move should be a little less than the on prior. The time frame going forward will be one of disbursement of energy that was built over the past 5 years of moving higher. The first down was the biggest, and each afterwards smaller until what will actually be expansion having introduced inventory into the market by this time next year. Note the significant discounts to next year's feeder cattle and fat market contract months and believe that current contract highs for the out months may well be solidified to expiration. I recommend maintaining all hedges.
Corn: Farmers were given an opportunity that was never, ever, thought of via the current events. With recommendations made to capture portions of this, even with a large portion having been transacted in the early morning, farmers should have a good start to marketing, or increasing a previous average. Cattle feeders are behind the 8 ball with corn prices having soared the past couple of days. I do not recommend buying the calls at this moment, simply due to recent price gains and premium of options that would put you owning July corn at levels it may be difficult to achieve. I anticipate the remainder of this week to see trading within today's range.
Energy: Nothing to see here. The price range is phenomenal. I don't think the market reached a level of finding sellers as it did just running out of buyers. Like the grains, I anticipate a large portion of the remainder of this weeks trading to inside of today's price range. Regardless of price action going forward, a great deal of damage has been done towards input costs that may not go down as quickly as they ran up. Due to the severity of today's volatility and price expanse, I have no idea what farm fuel will be priced at when you check, but if able to book at what a $3.30 equivalent is to the April futures contract, you may want to top off tanks at this level. From the 2/27 close, April diesel rose $1.87 per gallon with as I write this, is down $1.18 off today's high and $.69 from the 2/27 close. That is more trading that took place than since inception of this contract. Again, the current event seems to be very one sided, leading me to anticipate something from the other side that could spoil the best laid plans.
Bonds: Bonds sold off as energy soared overnight. As the rally subsided, bonds were able to trade plus on the day. The ramifications of this event will take weeks, if not months, to seep into all aspects of whatever energy touches.
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.
