Pure Hedge – Livestock and Grain

Bill AllenGeneral Commentary


The Livestock and Grain Markets all closed lower today, the last trading day of the year. February’24 Live Cattle was 0.425 lower today and settled at 168.500. Today’s settlement price was just above today’s low of 168.350. The 1-month and 52-week low is 162.400. Since 11/29 February’24 Live Cattle is down 4.450 or just above 2 ½%. The Feeders were slightly lower as well. March’24 Feeder Cattle was 0.025 lower today and settled at 223.100. Today’s settlement was not much above the low of 222.725. The 1-month and 52-week Low is 209.150. Since 11/29 March’24 Feeders are down 0.650 or about ¼%. The Hogs also continued lower today. February’24 Lean Hogs were 0.475 lower today and settled at 67.975, just above today’s low of 67.650. The 1-month low is 66.225 and the 52-week low is 65.800. Since 11/29 February’24 Lean Hogs are 2.150 lower or just over 3%. The Soybean Break I am expecting could have begun today. I have stated that I thought the Beans would break about 50 cents at the start of next year, before March’24 Soybean Options expire on 2/23/24 (56 Days). Today March’24 Soybeans dropped 14 cents and settled at 1298, just above today’s low of 1296 ¾, which is also the 1-month low. The 52-week low is 1145 ¼, just so you know. Since 11/29 March’24 Soybeans are down 68 cents or almost 5%. The Corn Market also continued lower today. March’24 Corn slipped 3 cents today and settled at 471 ¼, just above today’s low of 470 ½, and not far above the 1-month and 52-week low of 468 ¼. Since 11/29 March’24 Corn is down 5 cents or just above 1%. The Wheat Market gave a little back today too. March’24 Wheat was 3 ½ cents lower today and settled at 628, in the middle of today’s trading range. The 1-month low is 582 and the 52-week low is 556 ¼. Since 11/29 March’24 Wheat has gained 42 ¼ cents or over 7%. I feel that the Livestock and Grain markets will be under pressure next week, with most Hedgers and Traders back from the Christmas and New Years Holiday. I believe a very volatile year is coming, with large swings up and down, because of the current elevated price levels, across most commodity markets. I think the best way to weather that storm, is with a solid option strategy. Twenty-five years of being a Pit Broker, watching what the traders, commercials and funds did, gave me a unique insight in how, when and why they acted, and how to be positioned before and after. I have knowledge that your “broker” could not possibly have. What has your brokers advice been over the last three months, and for the next six months? I want to help you succeed, in any trading or hedging environment. There is always risk involved, everyone knows that, but I feel that the opportunity that awaits us over the next 12 months could be special. I recommend we talk about it soon. There will definingly be swings in every market, but using Option strategies correctly can be rewarding. The key to it is timing, same as in everything else. The same Option trade executed today, may or may not work in a month, but it could be drastically more expensive and riskier. I still recommend taking advantage of the current price levels, and begin hedging now, if you have not started that process. It is still my opinion that we will see $11.50 Soybeans next Summer or Fall, and that the Live Cattle markets will head toward the 145 level, and the Feeders toward the 185 level through the Summer. If you are interested in learning how I structure Option Trades or would like structured Option Trades, based on your unique hedging or trading goals, send me an email or give me a call. I will be the one replying to your emails or answering your call. Have a Blessed New Year.