Shootin' The Bull about cattle consolidation, fresh reports, and the grain rally

Cattle:​

It's been a while since I could say that a market chose violence and also consolidated within the same timeframe but somehow cattle futures did just that this week as traders awaited the release of today's Cattle on Feed, Cold Storage and Inventory reports.  Since Monday's open, August feeders had over a $14 range and closed down only $.62 on the week. August live cattle closed up $2.65 week over week. Lots of indecision and position squaring but no real direction.

​

The cash market started with bids @ 228.  The majority have since traded at $230 which is $8 lower than last week.  At the time of writing this, TX was passing on $231.  Boxes kept eroding this week with today's PM choice print down another $1.63 @ 361.24. Select was down $2.04 @ $346.71.  Expect plants to start cutting shifts in the coming weeks if the cutout does not stabilize next week.  The Cattle On Feed report came mostly in line with expectations showing 102 On Feed, 97 Placed and 97 Marketed which was the lowest marketing number since the series began in 1996.  The placements number was 1.8% below the average guess, and I think the trade will take it as a neutral report.  The Inventory report showed July 1 cattle numbers up slightly.  All cattle and calves totaled 94.2m head compared to 94m head last year.  All cows and heifers that have calved were unchanged year over year and beef cows were down 1%.  All heifers 500lbs and over were 1% above last year and beef replacement heifers were up 3%.  The calf crop was down 2%.  The trade has been looking for any signs of heifer retention and this report shows some signs of it compared to the Jan 1 data.

​

Today's Commitment of Traders report showed that managed money sold 20K live cattle contracts week over week but still hold a long position of 75K.  Remember that data is as of last Tuesday.

​

I think the overall market sentiment is experiencing a shift at the moment and although both the live and feeder cattle futures charts look to be forming a base of a potential rotation higher next week, the lower lows in those rotations should not be discounted when managing risk.  Find a plan that fits your risk profile and set targets.  Let us know if we can help. 

​​

Corn, Beans & Wheat:

The rally in the grain complex was impressive this week.  December corn made new highs which have not been seen since May 20th.  Driven by war premium caused by shipping disruptions in the Red Sea, headlines related to the US/Iran conflict, and a threatening US forecast.  New contract highs were made in wheat and soybeans as well.  Counter-seasonal rallies are often accompanied by violent price action and we saw a good example of that in today's wheat trade.  New highs in the overnight, then a 50 cent move lower over the next 5 hours when a Russia/Ukraine de-escalatory headline hit the wire.  No substance, but the market responded.  Speculative interest is still high with managed money adding to length over this move, but that can change fast on seemingly innocuous news.  Soybeans closed solidly up on the day with no signs of losing steam.  For the week, Nov beans closed up 50 1/2 cents, Dec corn up 20 cents and Dec Chicago wheat down 4 1/4 cents.  

​

Chris Swift will be back Monday.  Reach out to me with questions.

-Chris Winward

​​​​​

​​​​​​​​​​ “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.

​