“Shootin’ The Bull”

End of Day Market Recap

by Christopher Swift

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3/28/2024

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Live Cattle:

With the aspects of cheap corn now out of the picture, those declining cost of gains is now expected to rise.  While not necessarily bullish, the report is in no way bearish.  I think what it will do is shift basis, as farmers will be reluctant now to sell, knowing of the lower carryout and potential planted acres.  So, one more thing the cattle feeder has to contend with.  With crude having made a new high today, and nothing seemingly cheaper to the consumer, more shifts in both discretionary spending will be expected.  All in all, after the dust has settled, I continue to believe that the Avian Flu had no impact on traders and it was actually the cattlemen and meat buyers that chose to not buy at the high, sending the futures traders towards the exit door. The $313.00 box price, and near historical high for feeders,  seemingly just had some buyers fold their hands.  For the time being, I continue to expect further consolidation of prices within, what may look similar to, a triangular pattern. 

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Feeder Cattle:

If you didn't think the futures trader was a benefit to you, consider that after the report suggested less corn, and potentially a higher price, the futures traders, instead of sinking them lower, bought them on the close.  Whether just some short covering before the three day weekend, or basis buying, futures traders continue to offer premium that is found nowhere else. I continue to anticipate prices contracting within a triangular formation.  Towards the end of May, when hay and pasture conditions can be assessed, that is when I would expect the feeder cattle market to make their next move, whether higher or lower.  I continue to believe that the longer the cow/calf sector liquidates, the stronger toe hold alternative beef production and sourcing will have.  The rationing appears to be starting to work.  Hopefully, no damage will have been done to the consumer that can't be repaired with a lower price. 

Hogs:

Hogs were mixed. Today's trade was a  sizable outside day that closed closer to the low than high.  This could have been the top of a wave 2 correction.  I recommend selling June hogs with a buy stop to exit only at $103.80.  This is a sales solicitation.  The lean hog index was up $.56 at $84.25.  

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Corn:

The report is believed friendly towards corn.  Lower carry out and lower acres planted is expected to keep corn from a bear market.  While maybe not a bull market, but cattle feeders will have to take note when purchasing feeders that the cost of gain most likely won't be nearly as low as expected prior to this report.  Wheat moved higher and recommend hanging on with a sell stop to exit only at $5.42.  The December wheat/corn spread narrowed, producing an opportunity to enter at a lower spread.  It wasn't by much and even with the data on corn, I would look for wheat to continue to widen against. Beans were probable the worst with more acres and a higher carryout.  I have no new crop recommendations yet, but am eyeing the $12.20 level for November beans to start recommending making some sales. 

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Energy:

Energy prices took off today.  Crude set new highs in this rally with gasoline hot on its heels. Diesel continues to wane, but was higher.  Unfortunately, it appears that fundamentals are reaching as far back as last fall when it was stated how poor of an energy policy the US has.  Note that US oil production is at one of the highest outputs ever, and yet prices continue higher.  Due to the previous President producing negative oil prices, I think it becomes obvious that who steers the ship is as responsible as anyone. Nonetheless, its higher and retail stations will be quick to raise prices again as the summer driving season quickly approaches.   

Bonds:

Bonds were firm, but not by much. The final GDP didn't offer much in the way of news.  I expect bonds to move higher, but not sure from here. 

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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.