Live Cattle: Basis was destroyed at the opening this morning, pushing all futures contracts into a positive basis and widened the backend out significantly. Regardless of a top or not, the volatility, price expanse, and now potential basis issues, will complicate all of the best laid plans. I recommend maintaining all hedged positions.
Feeder Cattle: The tiger trap was dug a lot deeper this morning. This will complicate all of the best laid plans. I recommend maintaining all hedged positions.
Corn: Bio-fuels are needed to domestically consume large quantities of grains and oilseeds without further export demand. China is believed being coerced into trading with the US, to avoid other markets being included in the tariff issues. I am not sure corn will follow greatly, simply due to the length of time for a build out for E-15. However, when you flip to a close only chart, eliminating the noise of the day, you can count 5 waves down and then a smaller 5 wave move up. For the time being, it appears that corn may have bottomed, but I am unsure of what the top side may be. This should be paid close attention to by cattle feeders, having to manage the historic cost of acquired inventory.
Energy: Sharply lower. Energy is not going to be left out of the volatile trading. With signs of trouble in employment, and the President needing to keep rates low while wanting inflation to spur the stock market, the trying to get everything at once may be too many monkey wrenches thrown at one time. I am now neutral energy prices and won't be hesitant to be back bearish with a weakening economy.
Bonds: Bonds are higher. This is opposite from my expectations and lower bonds can have a tendency to reflect a weakening economy. When coupled with the S&P breaking a 4 month up trend line to the down side, I think more precautions should be taken than risks.
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.
