“Shootin’ The Bull”

End of Day Market Recap

by Christopher Swift

​12/26/2024

Live Cattle:​

Cattle futures were higher today with not much more than basis convergence to discuss.  Input costs continue to move higher.  Fuel is about the only thing that wasn't higher today, and it was only down a fraction.  Inflation is believed rearing its head again.  The question comes as to whether cattle improve in price with the inflation, or beef suffers, due to the inflation.  ​

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Update on Head & Shoulders pattern in the cattle market. 

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Feeder Cattle:​

​Of one thing that is for sure, with packing and production capacity well over the number of animals to take care of, rationing will continue.  This time frame of rationing, dramatically changing the beef/cattle industry, will terminate with fewer producers owning more inventory.  In order to stay in the cattle business, this is what you are faced with.  Futures and options will continue to play a critical role in the ability to manage the increased risks you are assuming.  Balancing the need for adverse price protection, as well as not stifling profit potential ,will be more difficult the higher the price goes.  Futures and options can only be reactionary, simply due to your actions of having assumed the risk of purchasing cattle in the first place.  So, think through this carefully as once you have bought the physical inventory, the futures and options market can only help so much when too much was paid for something to begin with.

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Futures traders are believed to have converged basis today.  There is still another $2.00 to $3.00 for some months to go to reach or exceed the index, while August and September are trading in a negative basis.  How cattle feeders start bidding for inventory at the first of the year will help to dictate movement of the index.  Something to watch for would be a $2.00 to $4.00 negative basis to materialize.  If so, this would present an opportunity to wrap up any spring sales while prices in the future were equal to present.  Cattlemen are excited about cattle and the price of moving higher so all of these cattle bought recently can make money.  Consumers, and most every business that handles beef, are not nearly as excited to see cattle prices, and therefore beef prices, rise any further.  Margins are squeezed at every turn and cattlemen seem to want to see them squeezed even tighter. 

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​​Hogs:

​Hogs were mostly firm.  ​​

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Corn:  

​All three posted unexpected gains today.  Beans, by far the most as every piece of news I read is bearish.  Corn is not surprising as I have made the necessary recommendations to be prepared for a rally in corn.  Wheat is the one I know the least about at the moment.  I am not bearish, but wheat is in a bear market.  It's tough to be bullish as well with this years crop in good condition.  ​

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Energy:​​​​​​

​Energy sold off as the day drug on.  I continue to expect energy to climb higher.  ​

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Bonds:

​Bonds, and most note's, made a new contract low today.  Inflation is rearing its head again and there remains tons of money out there to inflate a lot more. The US dollar was firm with it believed in a bull market.​​

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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.