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Swift's Market Comments

I'm still expecting a fats rally

I'm still expecting a fats rally
Closing of June should move the market up, and waiting on technical signs in fed cattle is the hard part.


The negative employment report this morning is a double-edged sword. On one hand the weaker employment additions suggests not as many paychecks as anticipated. On the other though, it created a significant reversal in the US dollar to all the major currencies. This may benefit some import/export trade.

Other than that, traders are being forced from short positions kicking and screaming as the firmness of the cash market exposes shorts to the basis with delivery an issue starting Monday.

Considering the speed in which retail beef sales receipts can be tallied, if this past weekend beef movement wasn't good, I perceive it would already be reflected in the futures.

The $122.00 level for June futures is the center of the range. The reverse symmetrical wedge on the June chart suggests we could anticipate a sharp rally in June futures. Getting over the $122.00 area will lead me to anticipate a rally to exceed $124.67. If marketings continue to improve, then perhaps we could see a move toward the top of the wedge line at $134.90.

I clearly understand how far-fetched this seems at this time. Stranger things have happened and the way money continues to sloshed around in commodity and equity markets, everything is possible.

As for feeder cattle, the opening and closing each of the past three trading days have been in exceptionally close proximity to one. The ranges from high to low remain at about $2.00 plus, but the closes have all been about the same level.

I perceive this as a pause. Since there is not much bullish the feeder market, I perceive the time spent trading sideways as better than moving down.

Time is needed to allow for production changes to take place and the industry to level off production in a manner that begins to equal or fall short of demand. 

An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits. You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources and other relevant circumstances. Past performance is not necessarily indicative of future results.

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