Shootin' the Bull about not much taking place

“Shootin’ The Bull”

End of Day Market Recap

by Christopher Swift

​11/6/2024

Live Cattle:​ 

A few markets excelled in blowing out established trends.  Bonds made new lows with the US dollar nearly a new contract high and equities a new historical high.  Cattle seemed to want to trade higher, but market action doesn’t bode well for cattlemen.  Higher interest rates on borrowed capital won’t be of benefit to anyone.  The higher US dollar will continue to keep more beef product on shores while making imports less expensive, and while some may feel rich with their 401K’s, it’s not spendable at the moment without a significant tax hit. So, long way around the barn, but today’s price action appeared as little more than a slight convergence of basis after having widened the past two weeks. 

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Feeder Cattle:​

I couldn’t find much in the way of a fundamental reason a cattle feeder would bid higher for incoming inventory.  While wheat may get a boost and some cattle redirected from being placed, this doesn’t appear as a major transition in production.  Like the fats, it appears that the wide positive basis was narrowed slightly today with few aspects available that would lead me to expect a rally of significance in cattle or feeder cattle.  While probably not the excitement some were looking for, with equal beef production as last year and same number of cattle on feed, at significantly heavier weights, I can’t find much that would cause the consumer to increase consumption or be more willing to pay a higher price for beef. ​

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​Hogs:

Hogs were higher today.  The index was up $.41 at $89.79.  Futures traders appear reluctant to relinquish long positions. ​

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Corn:  

​Grains were sharply lower through the night, but gained all of the losses back near mid morning.  Corn closed higher as did bean oil.  Both a factor of bio-energy.  Wheat sold off a little and beans softened, but neither did anything out of the ordinary.  I think that with recovery of oil prices, even with a Trump victory, it suggests there are underlying issues that could be specific to oil, or something he may have no control over.  Nonetheless, the spread between December and July narrowed sharply the past two days.  If you need to roll out of December, I recommend doing so sooner, than later with the spreads narrowing. Bean oil has broken out to the upside. Even though some hurdles of Chinese cooking oil and further delays in aviation fuel, the bio-diesel market is believed up, running, and ready to provide an alternative or partner to fossil fuels. ​​​​​

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Energy:

​Energy ended the day soft, but not before overcoming a $2.00 down day and a somewhat bearish EIA report.  Crude traded plus on the day and set a new high for the day after the lows were made.  At present, it appears a wave 1 and 2 have been made with a wave 3 to the upside anticipated.  As above, with the knowledge of a Trump victory, and his “drill baby drill” mentality, energy was not down hard at all.  The fundamentals could be specific to oil, or be out of Trumps control.  Regardless, I continue to anticipate higher energy prices.  ​

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Bonds:

​Bonds are sharply lower today.  There was little volatility and great price expanse in the bonds.  This selling appears vengeful.  What appears as most interesting is that the Fed is most likely going to cut rates that is believed will only go to spur inflation further.  Lastly, I made the recommendation to buy March bonds today with a sell stop to exit only at 115.00.  This is a sales solicitation.   ​​​​​​​​​​

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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. 

On the date of publication, Chris Swift did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.