September 26, 2023

Big CLASSIC Sell Signal at the Top?

Supposedly “Bullish” Cattle on Feed Report last Friday…

And the Cattle market has started the week IN THE TANK?

The thing that sets Cattle apart from all other commodities is that you cannot “store” this LIVE product. Unlike Soybeans, or Lumber, or Crude, or Gold or any other hard commodity, if, for whatever reason you don’t want to sell it, you CANNOT put it away somewhere waiting for better prices. But with a market ready steer, you CANNOT say, beyond a very short timeframe, “I think I’ll wait.” And not only that, with that animal being fed, or being paid for while standing in a feedlot every day, it DOES cost money to hold it…And this IS the very real reason why cattle prices do just get bombed quite often when prices are declining…Everybody out there who is holding them…hoping for higher and higher prices…ends up in a situation where they are watching big bucks disappear every day (and again, while COSTING them money to hold them)…And this becomes the absolute epitome of a market get clobbered by PANIC NO CHOICE SELLING.

And I firmly believe that IS the scenario we are now entering…At the highest prices in history, when every cattle guy I talk to repeats the same phrase (that they have picked up from all the genius sheep-herd analysts out there), “We have record low numbers. Cattle prices are gonna be good for the next few years,” IT JUST MAKES ME ALL THE MORE BEARISH.

I THINK THIS IS A DEBACLE THAT IS JUST GETTING STARTED…As I have documented in previous newsletters, 15-25% declines are the norm here…And I think that is exactly what we are going to see during the next 2-3 months.

I CONTINUE TO STRONGLY RECOMMEND SHORTING BOTH OF THESE CONTRACTS…RIGHT HERE. RIGHT NOW…When they crack, they DO have a tendency to go straight, straight down…

 Buy Low – SELL HIGH?

Both markets at are their highest prices ever…So if you’d ever short anything (some people don’t), I’d remind you that short opportunities like this are quite, quite rare…

It goes without saying, I might be dead wrong, and if I am you could lose whatever money you invest…But for me, the potential reward makes this absolutely worth the risk.

Call me if you want to do something with it…

Thanks,

Bill

770-425-7241

866-578-1001

All option prices in this newsletter include all fees and commissions. All charts, unless otherwise noted, are by Aspen Graphics and CRB.

The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within:  Live Cattle, Feeder Cattle