Were the futures markets not so decisively discounted, I would dare to say that bears have little room to talk. The discounts give bears a reason to be bearish the supply issues. However demand does not, and futures are not perceived reflecting the demand.

Hence again, this year of transition will be spent attempting to aggregate the basis between a strong cash market and a non-believing futures market.

I perceive focusing on this issue alone will help to make beneficial marketing decisions.

Traders are firming futures this morning as it appears regardless of what is to come, there isn't enough at present. Although most eyes are on the April and June contracts, I continue to view the December contract and further out as ones to own when attempting to aggregate the basis.

The seasonal tendency turns ugly for the April and June contracts towards the end of this week. With the discount of futures as they are, futures may do little more than continue to trade in the range they have been since the Jan. 19 high was made.

Were April to near the $118.00 area again, some tough choices will have to be made as to whether to hedge them or not.

What has potential to improve one's final sale price and still not be exposed short would be to sell calls. Bear spreads are anticipated to work well in this environment through April, when the seasonality turns more positive. Selling front end and buying the back end would be a way to quasi arbitrage the basis spread between April (closest related to cash) and the October and further-out months. By today's price action, I am not the only one that perceives this.

Feeders are marking time to see what the wheat grazers are going to do. Some appear to be making regular marketing's while others in the more stressed areas are keeping cattle on the wheat longer and forego the wheat crop. This won't cause any numbers to decline, but could spread the bulk of wheat cattle out over a longer period of time coming into yards.

There are some further steps needed to complete the wave 2, and price action today isn't enough to get it done today. Every piece of information I read over the weekend has had some change in analytics from the weeks prior. Some more subtle than others, but some are suggesting the increase in demand will cause the worst of the supply situation to be muted by this factor.

Regardless, the changing of the spreads between contract months, and persistent narrowing of the basis towards going negative suggests the worst may be over with this spring for the feeder market.

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.