This is a sample entry from Kirk Donsbach’s newsletter, The Cattleman’s Advisory, published on March 6, 2017.
Weekly Cattle Commentary 03/03/2017
The contradiction in the cattle markets increased this week, with cash setting yearly highs and boxes up 20$ from February but with deferred futures settling lower. Still expecting a big move once the market shows favor to one side or the other. I don’t know which direction that will be.
Cash sales for the week were mostly steady at 125, with some late 126 in the North. Dressed sales occurred at 200$. Basis is plus 9$ over April futures. Many reports are indicating the processors will try to break the cash market this week. They have a sharply discounted April board and forward bought March purchases to leverage in their favor. They have not been successful in previous attempts.
The week ending Feb 18th showed steer carcass weights increasing 2# versus the prior week to 881#. Still well under last year.
Box prices have rallied 20$ in a little over two weeks and is now nearly equal to last summer’s highs. Volume will be key at these elevated prices
April Live found support after the COF came out as expected, and then got within 2$ of challenging the yearly highs on Wednesday. With asking prices of 128 to 130, the video auction coming in steady at 125 disappointed the market and it spent the rest of the week trading lower.
Feeder Cattle will likely follow Live’s lead. Keep an eye on corn and the assumed large supply of feeders coming to the market in March. Given January’s positive basis and relatively high prices, I expect the upcoming January placement number to be quite large again. COF will be released this Friday, 2/24.
Feeder Cattle will likely follow Live’s lead(deferred Live). Keep an eye on corn and the assumed large supply of feeders coming to the market in March. With March feeder futures now under current Live cash prices, the market is clearly expecting a very large Spring placement number. I am not in any way suggesting that is not the case, but if data would come out suggesting otherwise, March feeders are extremely undervalued. Of course, Cattle Inventory, 2 months of COF, and local sale barn traffic all suggest that in fact, the cattle are there.
March Feeders spent all week trading in its’ worn out trading range. The 20 Day MA is still acting as overhead resistance, with the 100 Day MA providing support. The chart read for feeder’s looks toppy and is acting very lethargic. Seasonally, weakness through March is expected.
CornThe rally in the grains should be monitored.
Short term trend for March feeders is bearish but not yet defined..
Moving averages are the definition of neutral, stacked 20, 10, 100 top to bottom, with the market trading around the 10 day.
Stochastics have a sell signal in place.
Down Side Targets (March feeders)
Support at 120.50
Overhead gap between 125.20 and 126.10
(No change from the prior week)Most of our clientele left Jan puts expiring worthless and moved to March 127 puts. We also rolled some 120 and 122 March puts up at 1:5 or 1:6 ratios. The last of them were done 1/25 as feeder futures slipped in the face of a 124 Fed Exchange cash highs and then again as the 128.65 support level was penetrated. We will maintain these positions until we start to run out of time, or the math works to roll them higher or lower.
We salvaged a little over a dollar of value out of the Feb Live puts and moved the rest of our clientele to June 104 puts. We are working orders to roll the 104 puts up at a 1:4 ratio.
Contact one of the Daniels Trading brokers below for more trading ideas.
March Feeder chart sourced from RJO Vantage 3/3/2017
March Corn chart sourced from RJO Vantage 3/5/2017
April Live chart sourced from RJO Vantage 3/3/2017
For more information or to sign up for current updates contact:
- Donna Hughes (email@example.com)
- Kirk Donsbach (firstname.lastname@example.org)
- John Payne (email@example.com)
Try The Cattleman’s Advisory – for 60 Days
The Cattleman’s Advisory – Trial - The Cattleman’s Advisory is a newsletter designed for producers of cattle by a producer of cattle. All subscribers can expect a weekly update of the Fundamental and Technical conditions of the cattle markets, setting the table for the week ahead.
The Cattleman’s Advisory – includes an email newsletter subscription.
The Cattleman’s Advisory – trial lasts 60 days.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.