Live Cattle: Further correlation between everything, and energy, was witnessed today as all markets reversed course from Friday's trade, with energy prices softening today. I anticipate energy prices to remain firm for the time being. Cattle feeders continue to be placed, or place themselves, into more peculiar situations than most. With projected margins from October '25 placements coming to fruition, cattle feeders still paying an enormous spread between weight categories and fed cattle, and today having the spread between starting feeder and finished fat widening better than 2 to 1, just keeps putting cattle feeders working from deep negative margins. Since this does not appear to change anytime soon, it leads me to anticipate a great deal of wallowing around in a sideways price range while losses mount to the cattle feeder. Pushing the sharply higher box price on to the consumer by means of restaurant menus or grocer shelves, would be expected to find some resistance.
Feeder Cattle: March basis has narrowed quickly today. The other months are trying as well. Today's price action appears a repeat of last Monday. By weeks end, the price had faded to new lows. This week may not be much different. The Moore Research shows a small tendency higher this week and next, and then lower into the first of May. My analysis is unfortunately melding into a no win situation for weeks to come. A large price stagnation would not benefit many in the cash markets and could have a tendency to see producers enter and exit hedges in fear or greed of missing out on a price move that may never materialize. One thing is for sure, the price volatility and expanse is enormous, and believed creating extenuating circumstances to the production of livestock and beef at the moment. That circumstance simply being the amount of input costs needed for production, in comparison to the anticipated gains.
Corn: As above, the correlation with energy has impacted all other commodities. With corn and beans a component of energy, they took the same path as did energy. Soybean farmers should be in pretty good shape after last weeks recommendations to own the $11.50 November puts. Corn farmers never saw the same gains in corn. This spread between the two commodities is expected to create some differences in farmer revenues this fall.
Energy: Energy opened higher on Sunday evening and continues to trade lower as I write this. Today's price action leads me to wonder if the $100.00 water mark on crude is going to be resistance, or simply traded through in time. For the moment, due to the extreme volatility, price expanse, and military actions, I don't think this is near over with yet. I anticipate energy to trade higher. Diesel fuel fell the most as it was up the most. This is not expected to help farmers, as diesel is just $.63 from a high that few participated in, about $.20 from where most purchases last week could have been made, and about $1.82 higher than at the first of this year. There will be tremendous variations between farmer income this year.
Bonds: Bonds are higher and I have no idea why. The President screaming for lower rates is not anticipated to help, or reduce inflation by any means. The housing crunch appears from commercial buying of residential property for flip or rental. No amount of lower rates can help with the significant price increase of housing. So, maybe a long way around the barn, but it feels a lot like of stagnation of growth, higher prices, and core inflation are upon us and going to be difficult to break out of.
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
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