05-03-2025
Shootin' the Bull about gut punching the cattle feeder
'Shootin' The Bull'
End of Day Market Recap
by Christopher Swift
2/27/2025
Live Cattle:
Another gut punch today to cattle feeders with new historical widths of starting feeder/finished fat spread. These spreads are believed producing an agenda for which market share is sought. Nonetheless, inflation continues to reduce the buying power of the consumer, and packers have cut kills. All the while, cattlemen continue to pour capital into ownership of inventory. I see no reason to change strategies at the moment. The slightly higher futures has barely converged basis. This suggests that risk remains elevated with both basis and directional risk to contend with. It sure feels like something is going to give way. Whether that is to the upside or down, somebody has to have some relief.
Feeder Cattle:
Both futures and CME index are sitting at just under their previous highs. With great expectations of more inventory becoming available from south of the border and wheat pastures, it is more than interesting participants are pushing this issue to the very edge. I continue to believe cattle prices will follow the Moore Research seasonalities. Therefore, marketing within a few dollars of their known highs in futures and cash, with knowledge of how each derivative will impact your marketing's bottom line, it simply boils down to which risks you are willing to assume, how much of, and how much to pay for someone else to assume your risk. Then, the hard part is living with the consequence of your actions with the clarity of hindsight 20/20.
Class III Milk:
Milk was higher today. I continue to expect milk prices to rise.
Corn:
Downside targets came a little closer today. Beans finally began to break lower again as well. Wheat is plummeting as conditions appear very favorable for pulling cattle off to produce a wheat crop.
Energy:
Energy was higher in a believed correction of the hard selling the past few days. I expect energy to soften or trade sideways as the impacts of inflation continues to hamper consumers.
Bonds:
Bonds were lower today as the Advanced Durable Goods report showed no let up on the inflation front. Equities are believed softening as well. With multiple conglomerate food companies missing earnings and calling for lower sales, and a few with layoff's, it appears that some are taking note of the potential turn of the economy and doing something about it. Not the cattleman though!
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.
