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“Shootin’ The Bull”
Commodity Market Comments
by Christopher B. Swift
January 12, 2017
On January 13 & 14, I will be in attendance of the Tennessee Cattlemen’s Association tradeshow. Stop by the “Swift Trading” booth to say hello.
Current conditions remain. Cattle prices are being cash led and when cash stalls, futures trade lower. This is perceived due to thoughts that inventory and weights will increase down the road with consumer demand remaining somewhat questionable as to whether it will be just sustained or grow. The flip side of this is that there are not going to be any increase in slaughter numbers for another 3 to 4 weeks regardless. So, if weather were to become a factor, or consumer demand create a slightly harder pull on inventory, then cash would be anticipated to remain elevated. Therefore, it would be hard to see the futures pull too far away from cash.
Volatility has reared its head in the feeder market. There is not much to do at this level. If you missed the top end, I would set my sights on a 50% retracement of this most recent decline to begin offsetting inventory that remains unpriced. At this time, there is not much to anticipate one way or the other. Further firming of the back months fats will go a long way in keeping feeders from plummeting, but something really impressive with the fats would have to materialize in order to offset the inventory perceived coming.
As many times as I’ve been snookered in my analysis, it is nice to have some justification every now and then. The beans blowing out of the shorter term down trend while pushing through and closing into resistance of the $10.32 bottoms, suggests to anticipate further upside movement. Meal came to within $2.50 of exceeding its high for the past 2 months. Oil was hyper volatile, but unable to hold the gains that the beans and meal did. This is not bothersome at this time. Corn continued to meander and wheat found strength from the 3.4 million acre decrease in seeding’s. All in all, not a bad day when you throw in the further movement lower in the US dollar, and higher energy prices. Commodities appear to have just a flicker of light at the end of the tunnel.
After the bulls beat the bears, they appear to be wanting to skin them to. Having retraced more than 75% of the previous loss this week leads me to perceive the down move a correction, or part of, and the higher price action the resuming of the up trend. Although crude is seemingly having a difficult time pushing out of the range, both unleaded gas and diesel are well above the same time frame price highs that appears to be resistance for the crude. I continue to anticipate a higher trade in crude.
Bonds remain forming a correction.
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