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Basis looks a couple different ways

​CME Feeder Cattle Index $241.90 NOV 2024 CME Feeder Cattle Futures $235.47=

+$6.43/CWT Basis (at the end of a month they cash meets the futures)

🚨Here is a new way to look at the numbers
CME Feeder Cattle Index High of all time July 12, 2024 $261.88

November 24 Feeder cattle futures $235.47

+$26.41/CWT basis spread to the all time high.🚨


🚨 PLEASE READ CHRIS SWIFT 🚨
“Shootin’ The Bull”
End of Day Market Recap
by Christopher Swift
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9/12/2024

Live Cattle:​
The October and December contract months are believed to be at risk the most from cattle feeders having paid an exceptionally high price for the incoming feeder steer. With losses over $220.00 per head from last week, this week will most likely only be worse, simply due to cash no higher and most likely a higher price for the feeder steer was paid. It won't be until sometime in or after December before the highest priced feeder cattle start to slaughter. Hence were fat prices to soften further, it will only go to exaggerate an already position. Nonetheless, since there is nothing that can be done now about what you paid for them, consider how you keep from losing any more on them than you have to. Basis today narrowed further. December is very close to having narrowed basis by enough to consider laying off some risk. While I may be totally wrong, but I just don't foresee the time frame coming for which a futures traders would produce premium for which the cattle feeder could then use to market inventory at the higher price of futures. I recommend you use this week's higher trading to plan your defense against a potential decline. This is a sales solicitation. While I would like to see basis a little tighter, I am unsure of this opportunity presenting much more. If you need help, call us and we can show you what we recommend. Then with more knowledge of what your marketing aspects are, the more informed decision we believe you can make. ​​​

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Feeder Cattle:​

The Moore Research seasonalities differ by enough to notice it between fat cattle and feeder cattle. Fats tend to jockey back and forth after mid September, with feeder cattle starting to take on a more definitive seasonality of trading lower into December. The month of October tends to be sideways. Nonetheless, this rally has narrowed what was once and exceptionally wide positive basis. The lower print today of the index and higher trading of futures, narrows it pretty quickly for one day. So, you have some decisions to make. Is this a narrow enough of a basis for you to feel comfortable marketing into? What are the consequences of you executing your hedging plan at these width of basis? Remember that we can help you calculate what the end result of your hedge will be, regardless of market action in the interim, or the last trading day. To do such, it would be helpful for you to know at what the average spread between the cattle where you market and the CME index. While we do believe all ships rise and fall with the tide, and that without a doubt the futures will converge to cash, simply due to the cash settlement of futures, but we know that from one day to the next, buyers in your area may not necessarily want to bid even with the board. Therefore, knowing your local basis will help you. As in, if the index is up $10.00 from today to the time you market, are cattle in your area, of the same weight class, $10.00 higher as well. Even if not the same price, both rose $10.00. ​

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Back to hedging this market. Put pencil to paper, figure out when you can market as close to the expiration of a futures contract as possible, the number of head to be marketed, and then consider the outcome of your actions were the market to be $20.00 higher or lower on sale day. If you can live with the consequences of your actions, then I'll be waiting for the orders. This is a sales solicitation.