Live Cattle: Futures traders deviated from cattle traders today. At this level of competition, creating extensive price gains, cattlemen have little choice but to continue, or do something else. I have no idea what the "something else" may be, but the segregation of revenue streams between those inside and outside of vertical integration is expected to have some stretched pretty thin. Today was no different when having to place feeder cattle $126.42 higher than the average between December and February live cattle futures.
From the start of the 3rd quarter to today's close, December futures have gained 14.5%. The $.70 out of the money $238.00 December put last traded at $8.52 or 3.5% of the value of the contract at $238.00. The purchase of this would secure 100% of the value of the contract minus the premium and secure 11% of the 14.5% gained the past two months. It would hamper further gains by 3.5% and once, or if, the live cattle were to rise more than 3.5%, you would benefit from.
Feeder Cattle: While grasping at straws, as to a top to the market, the candlestick charts may be providing a few more clues. First, on Wednesday, the spread between open and close was only $.10 on the October contract. Had they been the same, it would have been a doji, but at the moment, this is close enough. Next is Thursday's trade of a gap higher opening and lower close of the previous days real body. The real body is simply the spread between the open and close. My interpretation of the Elliott Wave has fallen short due to the extended nature of the 5th wave. With a belief that wave 4 is the low made on 6/24/25, it leads me to believe that if this were "the" or "a" top, the decline would be to the wave 4 low of the same magnitude of the wave count. For October feeders, this would put them back to approximately $300.65. Note that this would still be approximately $56.00 above the old 2014 high.
For the sake of argument, with it now known that a human can transport the screw worm, and the Biden administration let millions of undocumented, un-everything, walk across the border with everything they carried with, on, and in them, what is to say it hasn't been here for years and still not impacted domestic or wild animals? I understand a human can flick the maggot off, but who is to say "where" they flick it off? The aspect of the screw worm appears several years too late in just now thinking it can get to the US when so many humans were crossing the border unvetted. As well, is the uncanny timing of shutting the border when a great deal of the industry was touting fewer cattle. The on again, off again of USDA border closures, and known opposing comments by industry participants, sure makes for some interesting thoughts and conspiracy theories.
Corn: All recovered from their lows with corn putting on a little premium over yesterday. Beans are still of the most interest. I was able to speak to a couple of other analyst's this morning with comments of pods needing to be filled. Rain is the issue and August was dry in most bean areas. Some thought that with the cooling weather, a late rain may be of benefit in filling out pods. So, one of the reasons beans have yet to move by much, is the undetermined yield that could change rapidly in a few weeks.
Energy: Energy was firmer today after a lower start. I don't anticipate this to be a reversal, but more sideways trading in a fledgling bear market.
Bonds: Bonds were higher today. I anticipate bonds to continue to move higher.
Christopher B. Swift is a commodity broker and consultant with Swift Trading Company in Nashville, TN. Mr. Swift authors the daily commentaries "Mid Day Cattle Comment" and "Shootin' the Bull" commentary found on his website @ www.shootinthebull.com
This is intended to be or is in the nature of a solicitation.” Futures trading is not for everyone. The risk of loss in trading futures can be substantial; therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not indicative of future results, and there is no assurance that your trading experience will be similar to the past performance.
