Live Cattle: Due to the manipulation of slaughter, beef prices have rallied and cattle prices softened. This shift in production is brining profitability back to packers. Cattle feeders need packers to pay more, as we saw last week the extent of losses from cattle having been placed in October '25. The significant price swings are anticipated to continue as cattlemen need other cattlemen to pay more, but that doesn't appear to reverberate through to the grocer, restaurant and consumer. As these factors have nothing to do with the impacts consumers are feeling and going to feel further of the increase cost of energy. I anticipate energy to trade higher, but may not exceed current contract highs, barring the current one sided event to become two sided.
Feeder Cattle: As the index slowly melts, the basis was maybe just a little too wide, and traders simply narrowed the spread. I continue to anticipate a triangular price formation with the current portion down, following the Moore Research seasonality that showed fats and feeders topping in mid-February, and declining into the first of May.
I recommend using the narrowing of the basis, by futures, to continue to market inventory into the future. If correct on the triangulation, the February high is expected to be the highs for the remainder of the year. Current headline news is what is moving the markets at an exceptional rate of discovery. Not much more bad has to happen to send prices sharply lower, but I can't find as much good that would send prices sharply higher. I anticipate a return towards the November '25 lows, but don't expect them to be exceeded. If all follows suit, then the May through July rally may not exceed the February high and the August to November decline near a pencil point to the triangle. What moves prices out of the triangle? Most likely by how much expansion has taken place and is in the pipeline.
Corn: I anticipate new crop corn and beans to make another new high. Yes, that does seem difficult were the middle east issue to be resolved, but seemingly the current cost of diesel fuel and fertilizer, may well have some impact on quality of production. So, with two recommendations made, there should be a good start to marketing this years crop. I recommend you pick a point lower and draw a line in the sand for another marketing sale. Until that is hit, anticipate a clawing back of the losses with expectations of a new high. Maybe not by much, but making the high price, on the high oscillator reading, and this the first pull back from, leads me to anticipate higher trading to come.
Energy: A word of caution. The current events have been exceptionally one sided. We are currently showing the world who has the most advanced array of weaponry ever a massed. Showing your hand at a poker game is usually not recommended. As the current event has been likened unto a Chess game, in which players are sacrificed for the win of the game, but at times, the opponent can foresee the strategy and whether can win the game or not, inflict significant disruptions that may cause the other player to make a mistake. As the current situation is not one of fundamental supply and demand shortages or gluts, or a technical advance from a breakout or historical pattern to be followed, it is headline news on social media that algorithmic programs are monitoring for key words that may have an impact on current events. These events then are believed to trigger buy or sell programs that are automated, allowing for the amazing speed and width of price discovery. Long way around the barn to say that I anticipate energy prices to move back higher.
Bonds: Bonds could not hold on to fledgling gains for the day. The inflation that this will cause, even if caused by commodity and not core, is going to impact consumers. What we don't know is whether it will be long term or short term. For the moment, there is a belief that due to this event being so one sided, it should end quickly, but again, just about everything has two sides to it. Some of the better advice I've been given over the years has been to always look both ways before crossing a one way street.
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.
