“Shootin’ The Bull”

End of Day Market Recap

by Christopher Swift

​11/11/2024

Live Cattle:​ 

A volatile start to the week.  The bulk of trading has taken place within the first minute of trading at the opening.  This was an extreme opening that took out Friday's lows and then the selling dried up to nothing.  Boxes remain soft, as do cattle bids.  The only thing bullish I can see at the moment would be futures narrowing the current positive basis.  Other than this, there appears few reasons to anticipate the consumer being willing to pay a higher price, or consume more.  The US dollar made new contract highs today.  This will keep more product available domestically, while encouraging imports.  Especially were tariffs to be placed on some countries we purchase trimmings from.  Some participants lost interest in the market with a few over 3,200 contracts lost on Friday's trade.  It appears the commodity funds are going to defend their positions with such a small move out on Friday.  If they are able to narrow basis, it will provide those still not hedged another opportunity to do so.  This will continue to be interesting as it is noted funds and speculators are long a lot of contracts  

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Cattle feeders continue to enjoy a similar position in the positive basis as did backgrounders for the past several years with the negative basis.  That being, ability to buy cattle cheaper in the future than today.  Backgrounders have no where to go to sell cattle higher than today.  A stark contrast to the years prior where tens of dollars above cash were offered readily.  Cattle feeders have some hefty discounts they could wrap up for the upcoming spring with a fence options hedge strategy that can produce a maximum purchase price, with potential for a predetermined minimum purchase price to be elected.  Like the backgrounders, if you are tired of paying spot price, consider buying there where you would like to. 

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Feeder Cattle:​

​The index appears stuck in a very narrow range.  The rally in fats through October helped a lot of cattle feeders that still own the highest price inventory in history.  With last weeks lower trade, the gains began to turn backwards.  Nonetheless, a spectacular day of trading where thin participation created massive price moves in minutes, if not seconds like the opening.  I don't know who pulled out what orders or if there was a pile of sell orders or actually what took place the first minute, but few could even provide a quote as fast as prices were changing.  It's this type of price action we hope to avoid by filling orders outside of such volatility.  That volatility can put significant premium on to an option for which disappears as quickly as it appeared. There is a huge price range being traded at what appears as the top of a correction.  A narrowing of the basis will have me recommending to lock up any new purchases.  A widening of may lead to an opportunity to cover short calls.  At this point, there doesn't appear much to do.  ​​

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​Hogs:

​Hogs were higher to sharply higher in what looks to be attempts to narrow basis.  ​

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Corn:  

​Corn and wheat were lower, but beans have put on a spectacular show.  After the release of the WASDE, traders still can't make up their minds, but at the close, it appears the majority are a little negative.  I think bean oil is the market to watch, along with corn, simply due to their bio-fuel diversity. 

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Energy:

​Energy traded lower again today.  I remain friendly towards crude and believe the slightly lower trade to start the week will firm before weeks end.  ​​

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Bonds:

​Bonds are lower with retail rates close to, if not higher than this time last year.  The higher US dollar will be encouraging imports while discouraging exports.  This will go to keep more product domestically available.  The higher interest rates will help to curb inflation and were there to be the rally in crude as what is expected, then that will help to reduce inflation as well.  Keeping prices high is the best way to curb inflation.  When we start to see consumer go backwards, that is when the trouble will really begin, in my opinion. ​​​​​​​​​​​

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This is intended to be or is in the nature of a solicitation. 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 the 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.