“Shootin’ The Bull”

End of Day Market Recap

by Christopher Swift

​12/31/2024

Live Cattle:​

A great deal of distortion has taken place since the rain started in October.  The shift from placing cattle on feed due to drought, subsided overnight with a rush to buy inventory for wheat pastures.  This created a sharp spike in feeder cattle prices.  Through the holiday sessions, boxes moved sharply higher along with fats and feeders under extremely thin market conditions, whether cash or futures markets.  

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The June contract of 2024 produced a historical anomaly in that it made a yearly high on the weekly continuation chart. June or August was rarely a contract month to get excited about.  The year of 2025 will be interesting as seasonality's of fat cattle are that they tend to top the first week of January or the middle of February and then decline into May.  I recommend you consider this as you are placing, or going to place historically high priced feeder cattle.  

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Feeder Cattle:​

There is too much production and packing capacity for the number of animals available.  For over a year now, there has been an agenda in place to help ration beef and cattle to keep from running out.  Most recently, as this agenda is believed working, the industry appears to have begun rationing cattle producers.  The higher the price of cattle, the fewer that can participate.  We are in the midst of discovery of this factor.  With feeder cattle prices seemingly bumping against resistance of around $260.00, we will see if another round of rationing will be needed.  Another round of rationing would have me to expect another $10.00 to $15.00 on feeder cattle.  If the rationing is complete, or finds a lull, then we could see prices move $20.00 to $50.00 lower.  

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Lastly, I herd someone speak in a manor that put chills down my spine.  They simply stated, "this time will be different".  While there is no doubt in my mind a cattleman will do most anything to own a cow, the consumer's ability to purchase the beef will have a much greater bearing on price.  

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​​Hogs:

​Hogs were lower with the index down $.50 at $84.35.  I anticipate a downside target of the index to $75.00.  ​​

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Corn:  

​The sell off in corn on Monday didn't last long.  Neither did it in the beans or wheat.  It is interesting that prices of these are moving higher with such significant supply on hand.  Makes you think "what don't we know." ​

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Energy:​​​​​​

​Energy was higher and has begun to break out to the upside.  February crude traded above $71.97, exceeding the November 7 high.  I have continually remained bullish energy with expectations of confirmation coming quickly now.  Diesel fuel is moving higher as well and actually leading the way.  Carry charges are inverting, suggesting demand for diesel fuel is increasing.  Note as well that gasoline is reverting to a carry market, which encourages storage, suggesting demand not as strong for gasoline.  This is interesting as the fuel source for commerce is diesel and to the consumer gasoline.  I smell inflation starting to simmer again that may help business and production, but continue to make it a little harder on the consumer.   ​

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Bonds:

​Bonds, and note's are lower.  Interest rates are higher.  The Fed thinks things are okay by lowering rates, while world is saying things are not okay and we don't want your debt. Hence at the moment, banks are making a significant spread.  I expect equities to continue to be impacted by the higher rates.  The ability for so many to turn years of investments into a fixed rate for potentially the remainder of life, is something just 10 years ago was not even thought about.  Recall this government went into debt by 27 trillion dollars from 2008 to 2024, with over 10% of that coming in one paycheck in one year called Covid. It will take a long time to get inflation under control at this level of debt spending.  If you think this is tough, try when we are asked to live within our means.  Change is coming with a few markets having a huge head start. ​​

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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.