Live Cattle: The on feed report continues to show how well cattle feeders and packers are working together to keep beef prices affordable to the consumer. Pricing your product out of reach of the consumer is not what cattlemen want. Instead, it appears that cattle feeders are meticulously placing cattle at a rate that keeps the same number on feed with marketing's steady as well. The higher retail price of beef is believed keeping the consumer from increasing consumption or a willingness to pay more. This quells demand and helps the cattle feeder from having to put a lot of cattle on feed at egregious prices. Things I've noticed taking place, that are helping to circumvent having to pay higher and higher prices for cattle, have been the ability of the packer to handle larger carcasses, feed yards growing cattle bigger, and few features promoted at grocers. Lastly, if there is not the expansion this year, as many believe, I think it will be hard to tax the beef market with consumer demand. No doubt the spring will bring about grilling season, but at this point, I am unsure how quickly the consumer will respond. For now, the industry is believed to have worked towards continuing to do business with fewer cattle.
Feeder Cattle: Cattle feeders have done a spectacular job of not running the price of feeder cattle against themselves. Futures traders and supply sided analyst's have pushed, and helped to push, prices of futures to levels for which it is difficult to sustain margin, as well as, manage the sheer amount of working capital needed. Cattle feeders, showing some reserve, are believed turning the tide slightly as futures have no choice but to trade lower, to the index level, or be caught at expiration with a wide basis that will converge in your account to the level of the index, regardless of expiration of futures price. Nothing I read over the weekend leads me to change much of anything. Futures traders will most likely attempt another run higher, but maybe not until closer to the spring and summer video sales. Of one thing that has not changed, the pressure applied to the consumer from multiple financial factors at play.
Lean Hogs: Hogs continued lower today. They did trade some, but not very much. The lean hog index was up $.06 at $80.01.
Corn: Grains and oilseeds were mostly lower. I anticipate all to continue lower. November soybeans broke the $13.00 level. Although still closing slightly above $13.00, they are losing their rhyme of "beans in the teens". As new handles are made, it leads me to anticipate more price action in the direction of the handle's broken.
Energy: Energy continues its wilder than usual volatile trading. A greater than $3.00 range in crude with both diesel fuel and gasoline shrugging off a lower trade to close plus on the day. It is possible today's price action completed the wave 3 down. I anticipate some back and forth trading for a wave 4 correction, followed by a 5th wave to a new low.
Bonds: Bonds were lower by a point and a half today. Significant price ranges for debt instruments. Wednesday of this week will be watched more closely now that banks are failing.
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
An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits. You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources and other relevant circumstances. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS..
