“Shootin’ The Bull”

End of Day Market Recap

by Christopher Swift

​11/29/2024

Live Cattle:​ 

​At the $186.55​ close of June cattle today, it represents a price of $2,611.75 at 1,400lbs per steer.  At today's close of January feeder cattle at $259.20, it represents a price of $2,203.20 at 850lbs per steer, for a difference of $408.55.  When you take the spread of $408.55 and divide by the number of pounds gained, 550, it takes a cost of gain at $.74 per pound to break even.  When viewing the spread between starting feeder and finished fat in the past, seemingly wider than $70.00 begins to put losses into the hundreds of dollars.  As we have only seen one or two weeks of the past 5 months showing a profit in traditional manners of feeding, and the others with some approaching $400.00 per head loss, one has to realize that the cattle feeder is now solely dependent upon the price of fat cattle having to go up, as any sideways to lower trading would increase losses significantly. As well, with the basis now back to negative, cattle feeders are forced to come to the cash markets to find the cheapest price for inventory.  

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Feeder Cattle:​

​The margin squeeze between calves/stockers and feeder cattle is undeterminable, simply due to so many weight classes under feeders, and the range they have traded in.  Nonetheless, one can simply see the $20.00 to $30.00 price increase of the lighter animals where the feeder cattle index has risen approximately $5.62 from October 21, believed the day wheat pastures became available for grazing. In my minds eye, I see this time frame as another in which will further promote vertical integration.  Higher prices encourage production while lower price decreases production.  With the agenda of '24 in the rearview mirror, and the leaps and bounds gained in beef production, I have to assume that '25 will reach even greater lengths in increasing beef production.  While many believe expansion will cause a wrinkle in cattle production, I believe that with the agenda continuing, and expansion most likely not going to take place all at one time, I think it possible that we are seeing the top of the '25 cattle market made in '24.  Cattlemen have bought cattle up to these price levels and will own them for a certain amount of time, regardless.  Seemingly, a flurry of activity from cattlemen has been noticed in sale barns at a time of the year when volume tends to soften.  Futures traders have bought contract months up to price levels that equal or exceed cash levels and don't have to own them for any amount of time before exiting.  Seemingly, a flurry of activity from futures trades has been noticed, due to the increases of open interest. Both producers and futures traders have produced a flurry of activity that has driven prices higher.  Now, we need to find more cattlemen and futures traders to keep buying, so when cattle bought today, are ready in the future, they will be profitable. My best guess is that margins entered into today won't survive a sideways trade, or worse, lower. None of this is to say cattle prices will move lower.  They can move as high as someone is willing to pay for, or has to pay for, in order to satisfy themselves, or a contractual agreement.  Neither of which suggest a profit potential, just that desire, or contractual agreement has been met.  This will give you something to think on over the weekend.  Again, we can pretty much detail that a higher price will have the potential to profit from recent purchases, what concerns me is if they don't.  ​

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​Hogs:

Hogs were lower with the index down $.39 at $85.51. ​​

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Corn:  

Corn ended the day higher with beans and wheat soft.  I expect lower beans and wheat with steady to higher corn. ​​

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Energy:

​Energy was plus for some of the day with the close mixed.  I continue to expect energy prices to trade higher.  ​​​​

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Bonds:

​Bonds were firm again today.  The US dollar was lower.  I expect these retracements in both to be minor corrections.  ​​

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This is intended to be or is in the nature of a solicitation. An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of the margin deposits.  You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources and other relevant circumstances. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.