Live Cattle: A lower start reversed into a higher close. The consolidation of input costs, rising costs of feeder cattle, and no better fat market, continues to project significant losses. With as much price advance that has already been seen, it will be difficult to see much more until something changes. A change in consumer spending, either higher or lower, or an increase in beef production and imports. While the consumer is on the front burner, with expectations of a shift in spending habits, I anticipate this factor to be more of a price driver than a supply increase, or further decrease. I continue to recommend buying the at the money put on the February and April contract months. This is a sales solicitation.
Feeder Cattle: Neither line was crossed today. The front end came close, but not close enough. This leaves me to continue recommending initiation of a fence options spread in the spring months were traders to take prices $3.00 above current contract high, or below the high made on 8/21 per respective contract month. This is a sales solicitation.
Corn: Corn was soft today with beans lower. More hot and dry weather for pod filling the next 7 days in the mid-west, both north and south of. Today's softer trade in beans has pushed the May $15.20 calls to under $.30. I continue to recommend buying the May $15.20 soybean calls. This is a sales solicitation. Wheat has resumed its down trend.
Energy: Crude oil price soared today with traders pushing spot October to within less than a dollar of high made on the 10th of this month. This puts crude well above $83.00 and embarking on $84.00. With nothing dramatic at hand, imagine if something does start to break lose. Gasoline and diesel fuel are slow to catch up, but I anticipate them to in rare fashion. I recommend topping off farm tanks with the most recent $.20 decline in diesel prices.
Bonds: Bonds are higher. The odds are low that Powell will raise rates in the September FOMC meeting. Core inflation most likely isn't doing anything, leading to the pause, and since they do not recognize food and energy, it seemingly sets up the "risk on" environment we appear to be in. As the goal is to suck money from the system, the two best ways appear to be an interest rate high enough to attract deposits, and food and energy prices high to the consumer.
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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