“Shootin’ The Bull”

End of Day Market Recap

by Christopher Swift

​11/5/2024

Live Cattle:​ 

Fat futures have moved off the 10/29 top and consolidated.  Funds did not give up the ghost, but simply pushed longs from December to next years contract months in Monday's trade.  Regardless of next administration, I believe inflation will continue and rise.  Therefore, the question remains, do cattle and beef appreciate due to the inflation, or is the consumer impacted in a manner that curtails the resilient beef demand?  Since you have already been prodded to make some marketing moves, there shouldn't be too much to do until the next move of significance materializes.   

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Feeder Cattle:​

Note the over $10.00 positive basis to March.  Cattle feeders have the opportunity to buy cattle $10.00 cheaper in March than today.  If options were preferred over futures, then leeway could be created with the ownership of the at the money call and a $10.00 out of the money put, having cattle feeders procuring cattle $10.00 to $20.00 cheaper in the spring than today.  When the sun is shining on the other dog, the other dog needs to appreciate it. 

Backgrounders are expected to have little to do out to the first of the year.  With marketing's having been recommended finished by now, waiting for the next move to materialize is about all I see to do.  With the same beef production today as a year ago, and the same number of cattle on feed, I am unsure where the next fundamental will come from to move prices higher or lower.   ​​

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​Hogs:

Hogs were lower today.  The index was up $.82 at $89.38.  The December futures were down over $2.00.  This is an extremely wide basis spread for 5 weeks of trading.  With hog futures moving 15 days in a row higher, still not catching the index, and today down $2.00 and over $8.00 positive basis spread, this is going to be very interesting. ​

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Corn:  

​Grains were ho hum.  I expect some firming in corn if energy begins to trade as anticipated.  Bean oil will be expected to increase as well, however, it faces hurdles of China dumping used cooking oil on to our markets, as well as sluggish approval of further bio-diesel usage.  Nonetheless, cattle feeders are urged to turn variable input costs into fixed input costs. Although basis contracts may be difficult to acquire, price is not.  I recommend owning the July $4.60 corn calls. This is a sales solicitation.  ​​​​​

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Energy:

​Energy is higher today.  I expect energy to continue higher.  Traders pushed gasoline and crude above the 10/24 high, from which the Sunday evening $4.00 lower opening in crude materialized. This voids the gap action and is believed setting the stage for a rally to new contract highs, with expectations of a large price rally.  Most of this analysis is based on the weekly charts and the Elliott Wave Theory.  A close above $71.78, and then $75.56, it will suggest the triangle from the March of '22 high complete.  With the rally from the 2020 low to 2022 high believed a 5 wave rally, and the price action from the 2022 high to present a correction of, the next most probable move should be to the upside.  I say this with full knowledge of a potential Trump administration and the expectations of "drill baby drill" were it to become realized. ​

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Bonds:

​Bonds are lower today.  I expect enormous volatility in bonds.  Bonds are lower because we are in another bout of inflation.  This week will see what the Fed does next, and I would have a hard time seeming them lower rates again with just the weaker employment data to go by. Sales data continues to be strong and consumers spending until there is nothing left.   ​​​​​​​​​​

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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.