Takeaway

The presenter highlights a surprising rally in the cattle market, which he attributes to an oversold condition and improving cash trade. He sees a short-term technical opportunity for October futures to close a chart gap. In contrast, the hog and grain markets are experiencing pre-holiday profit-taking and running into chart resistance, with no clear bullish catalysts in the near term.

What the presenter said

• The cattle market saw a significant and surprising rally, particularly in feeders and live cattle, after a low start on Thursday. [00:43]
• The presenter notes the cattle market is technically oversold, and the October continuation chart has a "scary looking" gap lower below a key uptrend line. [01:48]
• October cattle need to rally into the "upper teens" to attempt to close that chart gap, with the fourth quarter being key to repairing technical damage. [02:18]
• Cash cattle trade improved, with prices jumping to 218 in the North and bids up to 220 in the South. [03:08]
• Some packers are reporting full coolers and are canceling Saturday kills, which may be related to logistical issues from beef imports. [03:27]
• The speaker expressed frustration with government involvement in the beef industry, arguing it hinders the free market's ability to correct itself. [05:27]
• Hogs are setting back due to profit-taking and have run into chart resistance; the presenter believes the short-supply story is "done." [10:28]
• Grains are also seeing profit-taking, influenced by Black Sea headlines, though the presenter notes funds are defending some upside on the charts. [11:25]

Trade ideas

• Instrument: Cattle

  • Direction: Neutral
  • Thesis: The presenter suggests the market is oversold and finding a bounce, with potential for October futures to close a chart gap into the "upper teens."
  • Conviction: Medium
  • Horizon: Short-term

• Instrument: Cattle

  • Direction: Long
  • Thesis: The speaker notes a good basis and incentive to move cattle, creating a potential for willing sellers.
  • Conviction: Medium
  • Horizon: Short-term

• Instrument: Hogs

  • Direction: Neutral
  • Thesis: The market is sluggish after hitting chart resistance and experiencing profit-taking. The presenter views the short supply story as "done."
  • Conviction: Medium
  • Horizon: Short-term

• Instrument: Grains

  • Direction: Neutral
  • Thesis: The market is seeing profit-taking influenced by Black Sea headlines. However, funds are defending the upside, and good demand could be supportive.
  • Conviction: Medium
  • Horizon: Short-term

Levels and data cited

• Cash Cattle (North): Regional jump to 218.
• Cash Cattle (South): Bids reported at 220.
• Hog Bellies: Down $32 yesterday.
• JBS Beef Imports: The speaker cited JBS importing "over a million pounds of 50/50" over the next three months.
• Freezer Capacity: Noted that Grand Island freezers are reportedly "full".

Risks and what would invalidate this

• The presenter warns that long-term charts for cattle look rough, indicating potential technical damage.
• Government involvement in the beef industry, including the DOJ investigation and imports, is seen as a source of market frustration that could lead to consolidation.
• Uncertainty regarding Russia-Ukraine peace talks and their potential impact on the wheat market.
• Too much variance in grain yields and general uncertainty could weigh on grain markets.