Shootin' the Bull about analysis

“Shootin’ The Bull”

End of Day Market Recap

by Christopher Swift

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10/16/2024

Live Cattle:​

Boxes have soared the past two weeks with mid day boxes above $316.00.  Whether short bought, heavy demand, or less beef to go around, the consumer is not going to see any breaks in retail beef prices for weeks now.  Few comments have expectations for lower beef production in '25.  Heifer retention is believed what will dictate this.  Right or wrong, my thought continues to be the consumer is not in nearly as good of a financial shape as government economic reports reflect they are. Energy is expected higher, further hampering discretionary funds.  None of this will make cattle go up or down.  What this information helps me to decipher is what turn of events will need to transpire in order to achieve a greater willingness to pay a higher price, or increase consumer consumption. As all it takes is money, that is where I'm having a difficult time seeing consumers pay more. When quizzed about higher box prices, may reasoning, albeit from fact, is that procurers of meat are no different than most any other business.  They want to buy at the cheapest price and sometimes they speculate and are incorrect, leading them to have to go to the spot market to procure what is needed.  So, as the packer slows kills further, making less beef, those who did not forward contract for will have to come to the spot market to obtain inventory.  That is how or why I think you get the movement in boxes that does not necessarily relate to an increase in consumer demand. Fats are lower today and expected to continue lower.  There is no further recommendations at this point as it is believed you should have a put option underneath every head on feed out to February.  

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Feeder Cattle:​

Analytics' drawn from the 8/20 webinar have been found uncanny in it's correlation to what has transpired to date.  You can review the webinar HERE.  The index has begun to slip. Having come to within $.10 of a 50% retracement, with only human involvement, is quite impressive. Now we just wait to see if the cattle feeder will continue to bid higher, or attempt to widen margin by not paying as much.  As I do not foresee an increase in numbers anytime soon, or do I think '25 beef production will be much, if any, above '24, a declining price would be expected to be caused by a decline in consumer demand for beef.  This will be a factor no one in the industry will have a control for.  I fully understand how much of an oxymoron that is to just having watched beef prices rally $17.00 the past two weeks.  Again, I think that is due to end meat buyers being short bought of inventory and having to come to the spot market to fill needs. If you have a better idea, I would more than open to listen.  I have no further recommendations at this time.  A correction of this initial decline is anticipated.  If you have done nothing yet, consider an area between $245.00 and $246.00 January to start.  If another contract month is needed, measure .382% and .50% and start there.  ​

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​Hogs:

​Hogs were higher today with the index down $.08 at $84.08.​

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Corn:  

​A dukes mixture through the day of higher and lower prices.  Wheat slipped further than I thought it would, but produced some low risk trades with the $6.10 stop still valid.  Beans are weak and appear to be absorbing lower yields in the north and watching an increase of moisture in SA.  I don't expect anything any different at the moment.  Corn and beans are believed building a significant sideways trading range with wheat anticipated to move higher. 

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Energy:

​Energy saw both sides of unchanged and closed practically unchanged as well.  I expect energy prices to move higher.  I recommend users to either book some fuel, forward contract some fuel, or buy call options on crude oil. This is a sales solicitation.  The heating oil options are exceptionally illiquid to trade, with premiums tending to be inflated over theoretical value. ​​

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Bonds:

Bonds were firm.  I view the small rally as a correction of the down trend.  As government spending has yet to subside, neither has inflation. ​​​​​​​​​

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