“Shootin’ The Bull”

End of Day Market Recap

by Christopher Swift

​

3/26/2024

​

Live Cattle:

Although cattle futures are lower, nothing has changed.  Both are down approximately the same percentage.  If anything, the realization that no sector is making money would be the first on my list.  The price increases on food and energy over the past two weeks are now showing up at the retail levels.  Gasoline the easiest to see as we pass by the billboards regularly.  Groceries may be a little bit more difficult, but not by much.  All you have to do is buy a few items and the price will alert you quickly to the increases.  With the $313.00 box price headed to the retail shelf this weekend and into next, consumers will again see further price advances or the stores lower margins. With the analysis having been the anticipation of a large triangle formation to be built, it appears that traders are starting another leg within.  August fats have already closed well below the first up Gann Fan line.  The next comes in at approximately $172.00.  In March of last year, with only 4% more beef on hand than present, the price of April futures were $161.00.  

​

Feeder Cattle:

Futures traders pulled the plug and the premium is pouring out on the ground.  For whatever reason, the futures traders see no benefit in assuming your risk at the moment.  I continue to believe that no profit potential as a pretty good reason to stop providing premium.  Nonetheless, futures have moved sharply lower and most likely have further to go.  Some will attempt to be buyers, but once again, anything past May, you will just be paying premium that you may or may not have to when that time frame arrives.  This instance does not make me bearish or bullish, it helps to confirm what I have believed all along.  That is, the market needs time to find equilibrium.  The triangular formation is believed a market movement that will mark time, contract price range, and filter out those who disregard the risks inherent with commodity production. The charts below have triangles drawn from computer generated Gann Fan lines from the low made in December.  This should give you some idea as to what to expect.  I think if you are looking for a buying opportunity, the combination of convergence of basis and the contracting price range of a triangle would suggest that the next rally may fall short of this past one. 

Hogs:

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 down $.11 at $83.48.  The volatility and price expanse of this market is immense. 

​

Corn:

I recommend being long December Chicago wheat and short December corn.  This is a sales solicitation.  I recommend being long July wheat with a sell stop to exit only at $5.42.  Lastly, for corn farmers marketing new crop corn, I recommend buying the December $4.70 put, selling the December $3.90 put and selling the December $5.20 call options for a premium of $.11&1/2.  This is a sales solicitation.  This same spread could have been traded at under $.10 a few weeks ago.  The goal is to sell cash corn were futures to trade up to the short call strike, or take whatever profits available in the $.80 window.  If you don't like that, then buy a call option at the level you want to sell corn and if achieved, then you will be able to sell corn at that level, and still maintain upside profit potential through the call option.  The first spread protects $.80 of the downside while offering the ability to market corn at the short call strike.  The other trade is simply attempting to have the courage to market physical inventory were a rally to ensue.  It provides no downside benefit at all. Regardless of which way you lean, I recommend you get something done as the consensus I am forming is there is ample moisture to plant in and number of acres going to be equal to, if not a little more. 

​

Energy:

Energy prices softened today.  I don't expect that to last long.  Gasoline continues to be the strongest.  Diesel fuel the weakest, but potentially, an opportunity to top off farm tanks and book at least half of your spring fuel needs.  Energy has broken out of a corrective pattern to the upside and expect further upside potential, with both gasoline and crude oil in a bull market.  Diesel is too, but not as strong.  

Bonds:

Bonds were firmer today.  Not by much.  I think the Fed pulled the rug out from underneath both bulls and bears.  Next most likely move is further sideways. 

​

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.