Cattle Market Commentary 8/9

I expect a little house cleaning today as traders have been through a whirlwind of volatility this week.  Margin clerks will be expected to wrap up everything before the close so Monday will start with a clean slate.  Today’s reprieve from selling should help to give producers some time to collect their thoughts and consider going forward how they will manage risk in what is believed a reversal to a bear market.  The dramatic swing in basis will complicate the ability to hedge or market into the future without assuming the basis risk.  Hence, any narrowing of the basis will be viewed as a reduction on basis spread, offering a narrower window to market in.

The Hare still sees the Tortoise coming down the trail, so today’s higher price action is believed just taunting the Tortoise.  A narrowing of the basis spread by at least $10.00 will be needed to feel comfortable in making further sales. The toe hold gained from acting, instead of reacting, has allowed for significant adjustments to have been made to positions.  We are creating a call list, to alert those on, when basis has narrowed to a point in which we may feel action deemed necessary.  Let us know if you want to be on that call list. There is little to add that hasn’t been thoroughly hashed over the past week.  The charts on the “Shootin’ the Bull” website details the wave count on both the daily and weekly charts.  Recall that the index is void of outside influence with only a human making those decisions to buy or sell.  Hence, I believe may follow the rules and theory of R.N. Elliott more closely than futures markets.  Nonetheless, that is what I believe and will take it step by step as the industry continues to grapple with low numbers and now a potential decline in demand.