Cattle Market Commentary 7/31

Bonds made a new high from contract low today.  A signal of a need to lower rates, or better stated, stimulate.  Energy is believed initiating a bear market trend.  Consumers are believed to have begun to shift again, although resilience in beef demand appears to remain interesting. I don’t know what to expect next in price direction, but do know what can be done to avoid a negative connotation or capitalize on a positive one.  I recommend owning the at the money put option in the contract month you will be marketing inventory in.  This is a sales solicitation.  I fully understand I sound like a broken record, but simply looking at the chart’s volatility, there is little to think other than continuing to skip until someone moves the needle to the next song. The consumer is believed the one to move the needle at this point of the bull market as all aspects of supply are pretty much known.

Futures reversed from a lower opening this morning. This is about as normal as has been for the past 3 weeks now as traders continue to traverse the $5.00 range over and over again.  The continual contraction builds anxiety towards the breakout.  When it takes place, it will be the obvious one could ever look at in hindsight.  Since hindsight is yet available, I want to avoid any possible negative connotation that may arise, while still allowing for a predetermined benefit that may arise.  Were prices to continue higher, the benefit would just be that much higher of a sale.  Were prices to move lower, the benefit would just be that you sold cattle that much higher.  When viewing the index chart, and showing where you are in relation to previous months and years of trading, it gives you a good idea of what price erosion can materialize, as well as what may possibly come as some continue to garner more market share. Even with all of the premiums gone, now trading in a positive basis, there remains the ability to capture the current price, with an opportunity to still exceed the current index high, were that to materialize.  I recommend you buy the at the money put and sell the $10.00 out of the money call in the contract month you will marketing inventory in as close to expiration as possible. This is a sales solicitation.  In my opinion alone, I recommend you get this done while prices are still within the 3-week price range, and currently higher on the day.  This is a sales solicitation.