Wednesday, June 1, 2016

Mid Day Cattle Comment

Mid Day Cattle Comment June 1, 2016 Live Cattle: A slightly weaker start to cattle this morning. The ability to overcome a lower start, to close higher, would be viewed as friendly. Due to the short period of time that prices have been higher, it is difficult to suggest "the" bottom is in. However, the promotions being seen on television, coupled with the anticipation of good movement the past weekend, beef demand is anticipated to remain improving. Futures traders are now in a pitch battle with improving fundamentals. As of yet, I don't think the bears have relinquished very many short positions. May the 19th was a significant day down. It was the first day down that held sharply lower to the close, and then prices continued to the May 26th low. The May 19th low has already been exceeded. The high on that day was $123.05 on the June contract. Therefore, it would be just around this price that I would anticipate the bears really beginning to cut lose of shorts. My analysis suggests that there are still significant producers focused on supply. While I do not doubt that supply will continue to be elevated, I perceive the increase in promotions to spur demand to the extent it will curtail the bearishness of supply. Feeder Cattle: Yesterday was a good example of where the strength is. Feeders sold off while fats remained at their high. June remained the strongest as that is where the most pressing issue is. Feeders are anticipated to continue to ride on the coat tails of the fats until the stream of inventory begins to stabilize. Regardless of this though is the issue of whether or not new contract lows will be made from here. Off the cuff, it appears that with the 5 wave move down, the odds are slowly changing towards the lows being in. The extent of the rally from last weeks low isn't much in the way of providing opportunity. At this juncture, I am going to say this is where the rubber meets the road. It will be difficult allowing prices to fluctuate without doing something. Especially if lower trading materializes. However, until a new contract low is made in the feeders, I am going to perceive the wave count complete with anticipation of sluggish higher trading. Corn: Corn bulls jumped right back on the wagon again this morning. Corn is anticipated to continue higher with an upside target to $4.27. Beans are moving higher as well. I anticipate a new high in the November contract. This would lead me to anticipate an upside target to $11.51&3/4 Christopher B. Swift Swift Trading Company 144 Second Avenue North Nashville, TN 37201 877-863-2206

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