"Shootin' The Bull" Commodity Market Comments...

For Wednesday, November 19th

Live Cattle:  The vacancies left in the south from the southern border closure were filled in the north, in belief the north felt they may have obtained a stranglehold.  The stranglehold has been broken and sure enough, there are a lot of fat cattle that need to be slaughtered in the north that are moving south.  Heavier weights and higher volume has weakened the cash and futures market.  I don't know how long it will take to clean these heavy weights up, but maybe before Christmas.  The weakness in fat cattle should have kept feeder cattle locked limit down, but cattle feeders are either in a "have to" position, or they may believe that cattle prices will move higher.  Most agree the cattle on feed will shrink to the lowest numbers yet.  That may be for reportable cattle, but it seems that the past two weeks has exposed no telling how many fat cattle are out there unreportable.  Some analysts have already pointed out the similarities to 2014 and 2015 when prices broke sharply at the same time the lowest numbers were available.  In this case, 2026 may see the lowest numbers on feed, but with expectations of the southern border opening, the futures market has done an excellent job of pricing futures to levels for which it is possible feeder cattle fall to.  

Feeder Cattle:  Backgrounders are believed to still have some strength in the market from cattle feeders and futures traders.  The limit down could have stayed there and I'm not seeing any dramatically lower sales to move the index down sharply.  So, all in all, even though lower, cattle feeders and futures traders supported the feeder market significantly more than would have been anticipated at the current negative feeding margins at placement.

On the mid day cattle commentary, I recommended buying the January $330.00 calls.  This is a sales solicitation.  The width of basis spread, immense volatility, and price expanse, leads me to want to take a more neutral position with a net short incase something new develops. This means keeping all short positions, whether futures, options, or alternatives and if attempting to capture open position equity or more neutral in your position, do so with only a long call option.  Only owning the long call option will subject the buyer to a limited risk of 100% of the premium paid.  If prices move higher, one would be moderating open position equity.  If prices move lower, the decay of the call premium will slow, but long put options, futures, or LRP's will increase in premium or value.  Of issue remains the wide basis and current price levels of specific futures contract months already at projected lows for the index.  The futures market needs a cheerleader now to root it higher.  When the score changed, it seems like many dropped their pom poms. 

Corn:  All were sharply lower.  I recommend buying Chicago or Kansas City July wheat with a sell stop to exit only at $5.55 Chicago and $5.48 KC.  This is a sales solicitation.  ​

Energy:​  ​Energy was sharply lower.  The diesel fuel set another new high in the overnight session and has sold off sharply since.  The lower trade in the crude pushed it to a point in which it appears the down trend may resume again.  Recall this is believed a specific situation in which refining, or lack of, is the issue and diesel fuel, the energy source for war and commercial transportation, was in need the most.  I don't know if this situation is resolved or not, but for the moment, it appears so.​​​​​​​​​

Bonds:  ​Bonds ended the day softer.  I anticipate bonds to trade lower.  Thursday will be filled with spotty government employment data.  There is no telling what may transpire from it.  The President wants Powell out and one of his own in.  His desire to stimulate, over further reduction of inflation, is believed inflationary in itself.  Therefore, with the head & shoulders pattern on the charts, and more inclination to stimulate than not, it appears stagflation will remain with potential bouts 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.