Live Cattle: Firmer today with cash steady. Basis swings are what is taking place as cash is expected to be even with last week and the feeder cattle index having a difficult time pushing through the current ceiling. All it takes is more money and there appears no shortage of those willing to put it to risk. With very little foreseen, to drive prices higher or lower, an out of the blue event would be what is expected to move prices from here. Those can tend to upset the most well laid plans. In an attempt to avoid such, following the seasonal tendency appears as a way to help time marketing's before a definitive seasonal tendency begins. Cattle feeders remain emboldened and packers bleeding profusely.
Feeder Cattle: The index has hit a ceiling that will need a great deal of desire and money to push through. Futures are at such a positive basis that they can do most anything, and not much could be said. Stagnation won't help producers, due to the significance of input costs to overcome. A higher price is about all that will help to return the initial costs. So, as above, with not much foreseen, the seasonal tendency may be one of the better views we have of the future. With ways and means to help reduce basis spreads and potentially allow for a higher marketing, the three questions continue to be asked, how much risk do you wish to assume, how much do you wish someone else to assume, and how much are you willing to pay for it. I understand this may seem like over simplification, but managing extensive working capital in a commodity market where risk of potential price fluctuation is inherent, is difficult, so attempting to manage it would appear prudent.
Corn: Corn remains dormant. I can't foresee much to change the price of corn. Domestic consumption is believed a way to consume the massive stock piles. E-15 is believed a way to help chew through this and were the President to say anything similar about corn as he did beans, the out of the blue change would be anticipated to spur short covering to a similar extent as to what beans did. Soybean oil, due to the need for more bio-fuels continues to make new contract highs. Soybean meal is believed a drag on soybeans and keeping them from achieving new contract highs. Until something changes, I continue to recommend pricing some of your new crop at these levels. Since there is an ability to average with crop sales, this price is believed a good place to start the average whether higher or lower.
Energy: Energy has been higher all day and appears to be breaking out back to the upside. Days of sideways trading has plagued the energy markets and created a very volatile environment. Today though, traders were definitive in their movement and were even able to shake off a bearishly construed EIA energy stocks report this morning. Having read that China will continue to pursue a lose monetary policy, and the US already in that mode, inflation continues to be anticipated over deflation. With today's price action, I recommend topping off farm tanks and book some spring fuel needs.
Bonds: Bonds were lower with the employment report showing more jobs growth, and all in the private sector. Bonds sold off a point from the high, but regained a large portion before the close. Inflation continues to be anticipated more than deflation. The President wants the equities market to remain high and move even higher and it will be anticipated to take further loosening of monetary policy to achieve such. Therefore, I anticipate more printing of money, further devaluation of the US dollar, and more inflation. As volatile as metals have been, both gold and silver appear to have made a wave 3 high and working on a wave 4 low. This suggests a wave 5 to a new high before complete.
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.
