Live Cattle: Being "short" the futures market suggests that in order to exit that short position, the short would then buy the market to become flat. In business, being short-bought tends to suggest a need is unfulfilled at the moment, suggesting they are short of the items needed to fulfill a contract. I think, not to be confused with fact, that being short-bought in the physical market is a portion of the cause of higher trading. As everyone in business wants to have as much margin as possible, some may be holding off on purchases until the last minute in order to achieve a lower price were it to materialize. If the time limit draws near to having to meet the obligation, then those short-bought the market will pay market price to achieve the fulfillment of a contractual agreement. Again, this is my thinking, and not to be confused with fact. Other than this, it continues to be a test of how badly someone wants to remain in the cattle industry.
Feeder Cattle: Input costs, and the price of money, are on the rise. Inflation data this morning suggests consumers are getting few, if any breaks in price of goods and services. Energy appears as the biggest decrease in price, but that is anticipated to be fading. All I see at the moment is an increase in inflation with the incoming administration tasked with lowering it. With the current administration continuing to dole out money to everyone, there could be some very hard lines taken to slow the spending, so many Americans have become accustomed to. At the moment, I think further rationing is taking place for which will reduce the number of producers, having them own more cattle. Prepare for more assumption of risk.
Hogs: Hogs were mostly lower today with expiring December meeting the index. The lean hog index was down $.13 at $83.33. Hogs are believed to have topped with a downside target of the index to $75.00.
Corn: Corn is up $.21 in the past 5 trading days. As well, it is now in the money for the previously recommended $4.50 July calls. How the correction of this initial up move unfolds will help to decipher the next most probable move. I anticipate a wave 2 correction at the moment.
Energy: Energy is higher today with the February contract breaking out to the upside. Diesel fuel and gasoline were higher as well with expectations of both moving higher. I also saw where ethanol stocks are relatively low in comparison to years past. The increased bombing of Syria is expected to increase middle-east hostilities.
Bonds: The CPI data continues to reflect elevated consumer spending. Bonds were lower and the US dollar is believed to have resumed its up trend. That may mean that bonds are on the verge of resuming their down trend. Another rate cut would be viewed as just more stimulus before the current administration can be removed from giving away everything before leaving office.
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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