“Shootin’ The Bull”

End of Day Market Recap

by Christopher Swift

​1/28/2024

Live Cattle:​

On the mid day cattle comment, I recommended buying the $200.00 June put and selling the $208.00 June call.  This is a sales solicitation.  The ability lock in the June contract to within a few dollars of today's cash is rare.  Last year was a first for the June contract to make a historical high on the weekly continuation charts.  Over $200.00 cash  in June may be accomplished, but if not, then the marketing parameters will have you marketed in known price areas, at currently the highest price available.  Futures traders continue to shore up basis on the front end, but seemingly remain apprehensive to do such in the back months.  Not much is changing for the consumer.  Each day they seemingly are confronted with inflationary price increases of everything.  There is no difference when considering production costs as they are rising as well.  Reliance on consumers resilience to pay continues to be the reason for assumption of historical risk to produce a pound of beef.     ​

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​Feeder Cattle:​

Futures traders are narrowing basis.  This will provide producers with a more shallow tiger trap than in the past couple of weeks.  Hindsight and foresight are both working against the producer now.  In hindsight, we can see what producers were unable to capture.  The foresight produced by this is believed keeping some from making the difficult marketing decisions that need to be made. As well, the lack of decision making is taking place at a historical high with multiple factors at play that could as easily propel the market lower as higher. Inflation has resumed in commodities and is unlikely to shift anytime soon that I can foresee. ​Whether cattle/beef will continue to participate, or be detriment by, remains unknown.

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​​Class III Milk:

I recommend buying June milk and December call options on milk.  This is a sales solicitation.  Dairy replacement heifers are short, not expected to be replaced, with the advantage of milk prices being higher.  ​

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Corn:  

​Corn and beans were higher today.   For grain farmers, I recommend buying the December corn calls and November soybean calls at a strike price you would be willing to market cash grain.  Hence, were objectives met, you can sell the cash market and keep the limited risk derivative for potential further gains. 

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​​Energy:​​​​​​

​Energy has seen both sides of unchanged, but higher is the way they closed.  I expect energy to continue higher as it is believed the first wave up, and correction of, are complete with a new move to the upside anticipated.  I recommend topping off farm tanks or booking some spring fuel needs.  

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Bonds:​​

​Bonds are lower with little expectation of another rate cut. Banks continue to benefit from the wide spread between the Fed window and retail rates.  I do expect bond prices to rise slightly.  ​

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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.