For only the 3rd time in over 40 years, feeder cattle broke from above $90.00. That's right, feeder cattle prices have only been above $90.00 3 times in the past 40 years. The initial decline off the high tick made on 6/25 at $92.10 basis the October contract was $2.80cwt. From the low made on 7/11 feeder cattle prices have simply marked time trading into a triangular formation. Today, that formation was broken to the down side. This leads me to anticipate another move lower that will be equal to the first one or even greater than. This move lower has been anticipated for quite some time. Comments made on my website have helped numerous producers hedge their production against this price decline. If you would like to discuss a risk management program for your feedlot or feeder cattle operation, please feel free to contact me at anytime. Futures trading is not for everyone. The risk of loss in trading futures can be substantial; therefore, carefully consider whether such trading is suitable for you in light of your financial condition.
Funny, sitting at the auction today, prices are higher than the last couple weeks. Feedlots are already sourcing calves for fall feeding and are paying as well or better than last year.
It is funny how that works. I don't know if I'll ever figure it out either. The positive basis just keeps getting wider. What an excellent opportuntiy for the producer. Think about it. You make sales for this fall against the October contract. The cash market remains stout and futures continue to discount the cash market. In October, when you make sales, if the cash market is still higher and futures lower, you increase the price of your sale. If the cash market breaks, then you will still have the benefit of the declining futures market to help offset the losses accured in the cash market. Local basis has varied widely. For what ever reason the cash market remains strong this week, traders are anticipating prices to decline into late summer and fall. If they were not, then the futures would be trading higher and not lower. Don't leave out the corn market either. That is a wild card that could be played at anytime. What does your basis usually run in your part of the country? Is it wide, narrow or normal for this time of the year? I always appreciate in put. Thanks, Chris
Futures trading is not for everyone. The risk of loss in trading futures can be substantial; therefore, carefully consider whether such trading is suitable for you in light of your financial condition
