Takeaway

The presenter highlights potential near-term long opportunities in hogs and soybeans, contingent on breaking key technical levels. He argues a close above 74.80 in December Hogs or 13.20 in November Soybeans could attract significant fund buying and trigger a rally. While cash cattle trade improved, the speaker remains cynical about the market impact of recent policy announcements, believing fundamentals and price are more significant drivers.

What the presenter said

• The presenter noted that presidential executive orders on cattle markets have no significant short-term impact and primarily serve to appease farm groups. [01:22]
• He believes the enforcement of the existing Packers and Stockyards Act is more crucial than creating new rules. [04:08]
• Cash cattle trade improved last week, with prices reaching 220, and as high as 222-223 in the South (Western Nebraska, Kansas, Texas). [05:17]
• He pointed to regional processing imbalances, with the Fort Morgan plant slaughtering only 1,000 head/day last week, well below its goal of 4,000 head/day. [07:00, 07:31]
• For grains, the speaker believes the market needs supportive USDA reports, especially after the Pro Farmer Crop Tour reduced yield projections. [12:00]
• Funds are currently 48,000 contracts long in cattle but could potentially quadruple this position if market trends provide a reason. [10:15]
• A close above 222 in December Cattle is needed to attract significant fund buying. [10:36]

Trade ideas

• Instrument: December Hogs futures
  • Direction: Long
  • Entry/Target/Stop: Entry on a close above 74.80, with a potential target in the 80s.
  • Horizon: Short-term
  • Conviction: Medium
• Instrument: November Soybeans futures
  • Direction: Long
  • Entry/Target/Stop: Entry on a close above 13.20, targeting a rally to 13.65-13.80.
  • Horizon: Short-term
  • Conviction: Medium

Levels and data cited

Price Levels: * Cash Cattle: 218 (mid-last week), 220 (end of last week), 222-223 (South, end of last week) * December Cattle futures: 222 (resistance) * December Hogs futures: 74.80 (resistance), 80s (target) * November Soybeans futures: 13.20 (resistance), 13.65-13.80 (target)

Data References: * CFTC: Funds hold a 48,000 contract long position in cattle. * USDA: Cattle kill last week was 526,000 head. * Pro Farmer Crop Tour: Corn yield projection was down 2.5 bushels last month. * Fort Morgan Plant: Slaughtered 1,000 head/day last Thursday and Friday. * Douglas, AZ Port: 100 head of Mexican cattle crossed last week.

Risks and what would invalidate this

• Market breaking after reaching all-time highs.
• Risk associated with feeding cattle.
• Slow progress on policy changes and enforcement.
• Potential for continued shrinking crop yields and uncertainty from USDA reports.
• Dismal global and domestic demand.