This is a sample entry from Kirk Donsbach’s newsletter, The Cattleman’s Advisory, published on March 13, 2017.
Weekly Cattle Commentary 03/10/2017
Cash sales for the week were mostly 3$ higher at 128, with Iowa seeing 134. Dressed sales occurred at 202$. Basis is plus 10$ over April futures.
The week ending Feb 25th showed steer carcass weights decreasing 3# versus the prior week to 878#. Still well under last year.
Box prices have rallied 25$ in three weeks. Volume is roughly 5% over last year.
April Live is trading in a range between 115 and 119. Definitely not bearish, but still disappointing given what cash and boxes has done. I don’t feel the April board will be able to discount another 5$ gain in boxes. The board is waiting to fall apart and cash is racing higher. This past week was won by the cash.
Feeder Cattle seemed to lead the cattle market higher this week. Keep an eye on corn and the assumed large supply of feeders coming to the market in March. With March feeder futures nearly equal to 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 broke through the 20 Day MA resistance Thursday. Seasonally, weakness through March is expected, but not apparent. A trade above 131.75 creates a very bullish chart read moving into seasonal strength for the May contract.
CornThe rally in the grains should be monitored.
Short term trend for March feeders is bullish.
Moving averages are neutral, threatening to move bullish.
Stochastics gave a fresh buy Wednesday.
Down Side Targets (March feeders)
Support at 120.50
Yearly high at 131.75.
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 be looking to roll out to May on this rally. Going to use existing protection offered by the 127 puts to target at least 130 to 131 for the move to the May contract.
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 3/10/2017
March Corn chart sourced from RJO Vantage 3/12/2017
April Live chart sourced from RJO Vantage 3/10/2017
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