LE cow / cattle up gently. and HE lean hog down since Jun 2021. In face, lean hog price has dropped massively by 50%.
I don't follow the pigs, and follow the cows a little... I am too hung up in these damned equity indices. But LE at 130 is a high that has not been seen in a while IIRC. As for the hogs? I recall that like a year ago or so there was another one of those swine-flu things that wiped out a bunch of China hogs, so it is natural that there had been an increase in demand of the miss Piggys, and when the swine-flu went away and head counts stabilized, the price would drop. Just a guess, of course.
Am short Hogs from June highs, love trading the meats. I been shorting Cotton recently, still short Cocoa from last year, short Coffee from Oct highs-open interest has really expanded, short Sugar but doubt that will stand, OJ am long but had to hedge in Sept cause of chart pattern, options in OJ are dicey. So I hedge little different, exit nearby and put on a spread buying distant and selling nearby but still bullish OJ. I figure next year sometime be out of long term stocks, be mainly trading Commodities, stock options-directional and little of scalping Indexes. Wait for huge drop in stocks when everyone was late getting out before return to dividend stocks. Then buy land with water rights.
Cool that someone has been following the less-mainstream meats like hogs. I've been glancing at the cow reports each week, and their report notes have not been noteworthy and worth posting for a while. Keep on keeping on, Handle. MEAT! Mmmm, does the body good. There was one little bit that I was going to post but it seemed a little niggle. But since you bumped the thread, here it is... Grain Futures. Corn prices retreated from recent highs. Basis levels have been weakening following the run up in prices and basis levels and some harvest pressure on trucks is disappearing. The recent 30 cent rally in corn prices has implications for food inflation into next year. I did not post that initially when I saw it today, because after all, inflation is transitory, yes? Maybe tRaDaToR can make sense of it. Will a simple 30 cent rally in corn prices this month lead to continued higher food prices into next year?!? Hmmm!
I trade almost all USA futures/hedge when possible and Eurex/hedge different way. I have account for Eurex products that was converted to Euro currency and stays that way, got tired of paying conversion fees. I am over hedged on my stock positions, so making profits on stock hedges of ES, plus short all the Indexes for very long term trade, have done well over 100 tries of finding the top, have made first targets in all Indexes. Am hoping I can liquidate 60% of stocks by end of the year and transfer funds to very long term commodities and option Trading Plans, have stopped 6 of 8 scalping systems, risk is beyond sensible. Where Long term commodities have many losses trying to find extremes, usually come out ahead on the options as systems get more options/futures, stock options than needed. Have to be creative when hedging. Three options systems have less than 2% losing trades, so shifting funds in that direction as well. But I will always have 2-3 scalping/day trading systems going in automation as I have most experience into them and they are consistent. My favorite always been Meats, not as profitable as other instruments but very consistent. Need Live cattle to go up some, but Feeders are way behind on long side, still short Hogs. Only one system in automation is geared to fundamentals, I think by time information comes out, am last to the party. Staying short with Corn from near May highs, Wheat May highs, Oats from Nov highs, Soybean May highs, Soybean Oil June highs, Wheat Nov Highs, Hard Red Spring Wheat Nov highs, Hard Red Wheat Nov highs. Long Soybean Meal from near lows Oct lows, long Rough Rice July 2020. Still long Energies/hedged near H&S highs. Short Nat Gas from Oct. All trades from extremes took multiple attempts, if not for automation, it is like a full time job of tracking, but when much younger, I did it manually. Someone once asked me if I thought having Asperger's with higher than norm IQ helped me achieve, actually in beginning smarter creates problems of thinking I had to design complicated methods. I was told in 1991 was good possibility I was Aspy but I declined that I did, but last few years more testing proved to me... I believe that cause I enjoyed long hours by myself and difficult challenges my knowledge as I see the charts grew at a pace that most would never consider. I remember years went by after divorced where I didn't date, no vacations or parties, I was most comfortable trying out new ideas. I still love testing new ideas, but no more than 50 hours a week as I am engaged now, I have learned how to listen to girlfriend and test within brain of new ideas for day trading or options plays.... I now sleep longer as before it was 2-3 hours a day, now it is 4-6 hours and turn 65 today, wow 44 years of trading. So many changes in this amount of time, but overall people have become rude, lack manners, I have to hold in my desires kicking the shit out of them, all the years of learning new techniques of aggressive defense by working in our military has proved to be huge benefit, little shit today tried to steal my laptop bag, weakest part of hand is broken thumb, grab that sucker they will promise you anything. Being 6'6" does have it's advantages too, work out everyday, normally people stay away from me especially when I mumble..... Starbucks time baby.
Man, I'm all ears. If there's anything that you can convey on trading meat contracts, timeframe chart, holdtime, options, straight-up long / short ... ?
The annual cow report came out, and on average all cattle class inventory fell by 2%. Even with our supply chain issues, this sector may be one to watch in 2022 for more rapid moves. I cannot see the current price atm because I didn't roll over to April until tonight. (No, I am not going to the CME page to check. Lazy). Here's the weekly blurb on it. ---------------------- The inventory of beef cattle in the U.S. is expected to be in decline for the next two to three years. This is occurring amid a recent time of unparalleled demand for beef products – both for domestic consumption and for export. Domestic government handouts during the pandemic have allowed all the people to afford and choose beef as a center plate feature. Global red meat demand has increased as the health benefits of beef have been recognized in many countries where people previously couldn’t afford beef and diets were mainly from the grains. An emerging middle class in China has developed a taste for beef instead of pork. Monday’s survey reported a 2% decline in beef cows — up from the half a million cow reduction in pre-release estimates. Calves under 500# were down 3%. This will continue a trend started in 2019 driven by lack of processing capacity, low prices, and weather. This past year’s January inventory showed declines in cows, calves, and feedlot replacement cattle. The current report included cattle on feed in feedyards smaller than 1000 head and estimated total on feed at the same as last year. This is less than the monthly COF report. The tightest squeeze will occur when breeders begin holding back heifers for breeding purposes. Due to drought conditions, this has not occurred. Mother Nature will make this call and with more normalized moisture in breeding areas, we can expect some signs of holding of heifers later this year. Anticipation of shortages in the coming year and beyond have kept the deferred feeder futures price at large premiums to today’s prices. The future will hold a challenge for entire industry to struggle with sufficient numbers to accommodate current processing capacities and feeding capacities. The front-end supplies have been pushed into feedyards from operations lacking winter grazing leaving placements for the last quarter of 2021 well over prior year. This trend will change during 2022. The irony for the future of beef prices is they may fail to reach 2021 levels when covid created an anomaly for packers who were able to purchase cattle at lower prices and sell short supplies of beef at sky high prices that sometimes allowed $1000/head profits at the beef plant. Many times, during the past year, packers could have paid up to $180 and above for fed cattle and held on to a profit. As supplies of fed cattle tighten in the coming year, margins at the beef plants will shrink and cattle owners will acquire enough marketing leverage to lay claim to a fair share of the beef dollar. Political head winds will face the industry during this period of realignment when the industry attempts to rebuild a national herd in liquidation mode. The value of the dollar has reached multi-year highs — threatening export demand for beef by making our beef more expensive for the export market. Additionally, mid term gains by the Republicans might slow the impetus for government handouts and bring working class Americans back to the reality of living within a budget and developing more frugal ways that might harm beef demand or at least push some consumer choices to less expensive meats. Reversing the herd decline is a slow-moving train. It will happen incrementally, be weather dependent, and take time measured in years and not months. New beef plants will come online to cure the insufficient current capacity. During this period beef prices must stay competitive with other meats. Feed costs, interest rates, and labor will factor into the need for a competitively priced product. ------------------ Beef supply in decline over the next two-three years? How can that not be bullish for the live sector? Last I saw before the annual report came out, Feb futures was around 130 bux? Should be a fun sector to play at the CME.
Well, pulled up a LE chart for April, and wow. 3 point rise in the past few days. Currently quoting at 146.
Sheesh, we're in October settlement now, and beef is at nearly the same level. 144. Here's this week's commentary. --------------- WHAT THE CONSUMER WANTS Job growth continues and confuses the characteristics of a recession where un-employment skyrockets. The jobless rate dropped another couple of tenths leaving most people working although corporate layoffs are announced very day and the numbers may not have worked their way into government statistics. High employment is good for the beef business. People in the work force are receiving a monthly wage and under normal conditions, are choosing to add beef to items in their food budget. Consumers seem to tire of chicken and pork, and often return to beef as a heathy center of the plate option. Budgets vary from household to household, with the preferences of beef cuts often dictated by available funds. Recently, there is some evidence of movement away from the higher priced middle meats. One longer term trendline is the consumer’s taste for higher quality beef. The evidence is the pricing differential between choice and select or choice and prime. These quality differences are based on taste and whether the consumer is eating American beef in this country or abroad, the preference is a higher quality of cut. This has come at the expense of “grass fed” and now most grass fed offerings are getting some grain at some location to bring the meat to an acceptable standard. The choice/select spread has stabilized at $25 cwt. and choice/prime at twice that number allowing large premiums for those selling on the grid and achieving a superior quality grade. The consumer has not switched from meat proteins to plant based proteins. The fake burgers have mostly been a flop finding little acceptance from the consumer. Several trial runs at the national burger chains have resulted in dropping the plant based options from the menu. Beyond Meat stock price that reached as high as $200/share now trades in the $30s and just reported earnings of -$97 million and provided guidance for expected declining sales in the upcoming months. They also announced layoffs. The stock has been a popular short for hedge fund managers. Hard economic times may still be in our future and employment may take a turn for the worse. But for now, the beef industry is enjoying healthy demand. The choice cutout has failed to demonstrate the normal seasonal decline into the dog days of summer and instead has been relatively stable for the entire year fluctuating between $260 and $280. The hope of finding a summer bottom for prices of fed cattle leaves the promise of profitability by year end... -------------------- This seems like a peak on LE price.