Live Cattle: The wide positive basis makes hedging very unattractive. However, buying June or August futures, in an attempt to converge basis, doesn't appear a high priority either. Between keeping retail beef prices high to the consumer, rationing demand, and weights of cattle continuing to increase, more beef per cow, the industry is not nearly as short of beef as they once expected to be. The goal, and agenda to accomplish such, appears well in play that leads me to continue to expect prices to fluctuate within the current triangular formation.
Feeder Cattle: A definitive move in the feeder cattle futures today is believed to have set the stage for further declines. On the mid day cattle commentary, I noted a close above $255.22, or under $251.75 August, would help to decipher the next most probable move. Today's close under $251.75 August leads me to anticipate an intermediate wave 3 decline. Recall that the feeder cattle index produced confirmation this week as well, when it traded under $241.07. Feeder cattle are too high, and there are some interesting lines of production that are being created for which suggest the price of beef feeder cattle are way too high. High prices encourage competition, and the high price of cattle and beef have brought competition out of the wood works. The competition fills holes and gaps left from traditional ways and means of production that helps mitigate price fluctuation. Due to the slow production scheme of cattle/beef, it took a little while to set the stage, but once set, it seems as if the agenda is running at a really good pace to keep adequate beef available to the consumer, while not running the price so high, it impacts demand. Downside target for August futures is at $241.00. With the index expected to move to $230.00, this will at least keep the basis around where it is, were this to materialize.
Hogs: Traders are converging basis and computers believed diverging it. It will converge and it appears with the slow advancement of the index and sharply lower futures, the futures appear more likely to move to cash than vice versa.
Corn: At last week's planted acres, regardless of what they were, only a percent of was drowned. Of that which was not, had the best starting rain in the past several years. With drying patterns developing next week, the rally in corn and beans may have run its course. Wheat may be a little different, but I doubt by much. Ample price has been made available to execute most any structure of marketing you desired. Recommendations I made had ample opportunity to be filled. Now, we wait to see what transpires next.
Energy: Energies were mixed for most of the day will little change from previous day. Energy appears in a bear market with further downside trading expected. Bonds: Bonds were lower for most of the day, but closed higher. I expect bonds to move higher, but not sure whether they will consolidate further first.
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
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