Live Cattle: Only $6.47 in the spread between March feeders and August fats to the previous historical spread width of $136.67. Cattle feeders have gone from inhaling negative margins to gulping them down at 3 to 1 ratio's daily for close to two weeks now. This is a difficult scenario to figure out. Beef production continues to be rationed at the consumer level with historical highs for fresh beef. Packers have already made moves to increase efficiency with the closing of slaughter and secondary processing plants. Restaurants and grocers have just now started to see a reduction in negative margins with the lower box price. Cattle feeders have not reduced one head of pen space, actually grown significantly in the north, or have they any insight to when more cattle to work with will be available. Therefore, my opinion alone is that some are attempting to garner a lot of cattle around them and hope, or believe, someone in the future will pay an even higher price. In this case there is a need for a significantly higher to just return input costs. Hedging into negative margins is only as bad as not having hedged, and margins grow from bad to worse.
Feeder Cattle: Backgrounders have the best of both worlds at the moment. Cash higher and futures higher, with minimal basis spreads, puts the backgrounder into a very good position to take advantage of marketing's as far out as May. Although seemingly of no regard, but I can't help but look at the position cattle feeders are placing themselves in and wonder how much longer they can do such. I fully understand the answer is "for as long as they can", but I have to wonder if that is for much longer.
I recommend you consider doing something for your operation while the current desire to own your inventory is so high. Attempt to disregard whether higher or lower trading will materialize for the ability to fix a price, that may or may not be available in the future. This is a sales solicitation.
Corn: All ended the day lower. I anticipate soybeans to be in a bear market with potentially considerable more downside anticipated. Corn is in a sideways market, but broke an up trend line and is believed to have formed a wave 1 and 2 for which if wave 3 materializes, a downside target for July corn would be $4.35. Wheat remains in a bear market, with seemingly ample supplies. I am unsure how much lower wheat may go, but I don't see much in the way of it trading higher. I think it will take a drought of significance, somewhere in the world to reduce grain and oilseed production. I don't think that with subsidizing farming that farmers will reduce acres. So, I don't see a voluntary reduction in production, so it may be that either a really low price spurs buying, or a crop failure somewhere in the world. At the moment, the US is chocked full of corn and soybeans, no reduction of acres for '26, China playing hardball, and South America on the verge of harvesting a record soybean crop and just shy of last years Safrinha corn crop. I recommend farmers take some action early in the year and significantly enough that were prices to continue to erode, a larger portion will be fixed, leaving a smaller portion to speculation.
Energy: Energy prices have been extremely volatile the past couple of weeks. However, the diesel fuel continued to probe the downside and today is believed to have resumed its down trend. This is considered not good, because diesel fuel is the energy source for manufacturing and distribution and it's not doing well. To throw insult on to injury, the ISM showed a reading of 47, which reflects manufacturing to be in contraction. Gasoline and crude oil are lower as well, but diesel is leading the way.
Bonds: Bonds were soft. I anticipate bonds to continue lower, albeit at a snails pace. The juggling of excess spending of one class is believed creating inflation for others, and the management of interest rates to keep one going, and resolve the other's issues, is causing further divide.
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.
