“Shootin’ The Bull”
End of Day Market Recap
by Christopher Swift
9/24/2024
Live Cattle:
The most recent "risk on" trade the past week or two, is believed a culmination of factors that aren't necessarily bullish. When Powell dropped rates by a half a point, no doubt it most likely created some form of stimulus, but the reason for the rate cut is believed due to a weakening economy. The question here will be, does the economy respond to one big cut, or will this fade with more needed. China stimulated this week to the tune of 1 trillion dollars. That is stimulus, but the reason it was needed was due to the extreme slowdown of their economy. Lastly, this week is going to produce some delays in harvest due to the current trajectory of the hurricane. Hence grains higher. All in all, these factors are believed a part of the buying seen recently in multiple commodities. However, they are not believed to be trend changing, or trending fundamentals. I think cattle, to some extent, moved higher from a few of these factors, but in reality, the higher corn price doesn't help, or does lower US rates until able to factor in some time. So, cattle have rallied, along with other commodities, for various reasons. I recommend you use this higher trading to prepare for more of the same that caused the Fed to lower rates and China to stimulate. In other words, don't look this gift horse in the mouth. Wrap up what you need to do and do so in a manner you can live with your consequences.
Feeder Cattle:
Basis has been swapped to negative, evened, or narrowed greatly. What once was unavailable is now available. I do not know if cattle feeders will bid higher or fold their hands. Read the above again. It won't matter much if you begin to market on your terms and not the day you take them to market. You have had a really good example provided this year on basis, how it changes, and what those changes mean to you. Use this increase of knowledge to your benefit.
Hogs:
Hogs were a tad higher, barring October. The index was down $.07 at $84.29.
Corn:
Grains and oilseeds petered out at today's high. The delay in harvest will be questionable for another day or two. I recommend raising stops on previously recommended long bean positions. Hold on tight to the soymeal calls as those should be hedges, keeping your procurement at a fixed cost instead of variable. I expect a great deal of volatility the remainder of this week as the hurricane is expected to reach a category 3 by land fall, making it pretty stout for a long way into the corn belt.
Energy:
Energy made another new high from the lows two weeks ago. I am wrong for the time being, but do not believe being long is right either. As stated above, I think a great deal of this "risk on" trade is due to short term factors, more so than changing fundamentals.
Bonds:
Bonds were sharply lower from Monday's higher trade, but by the close, they had regained all but 3/32's from unchanged. Were bonds to start to move higher again, I think it would take the "risk on" environment off the table and reflect the reasons the US cut rates by a half point and China stimulated.
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.
On the date of publication, Chris Swift did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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