the market may see it differently than my thoughts but this report does not help soften the case for the seasonal Sink Hole that is about to open up for the cattle market. It does not soften the case for a large amount of meat production that could get hit with political trade wars and other economic bickering, which would quickly bring risk off selling pressure to all of the commodities.

On the surface that report seems neutral to slightly bearish since the numbers were close to expectations. When I take a closer look in comparison to last years Feb report we have 1% more cattle on feed which doesn't seem too damaging but the 11% increase in placements is a slap in the face for any friendly thoughts. A good chunk of that extra 11% will be marketed in the April, May, and June time frame, right when the seasonal Sink Hole opens up. We know how scary last years Sink Hole was for those that had no hedges in place for their summer cattle. This year with more cattle in the pipeline, should be just as deep a Sink Hole as last year.

This could be one of those years where a guy is better off by just being short June cattle and not messing with the cattle/hog spread. The hogs may decide to go down just as hard as the cattle. What I have done several years, is take my profits on the June hog leg on a bounce such as now at the 78.00 area and then reset it, if/when it drops to the next potential support area @ 74.00. Doing this has cost me my spread position a few times in the past but I never seem to be wise enough to capture the maximum spread profits anyway. I'm not that smart. That is not my objective anyway but it would be nice to some day say I put 90% of it in the bank. I'm just happy that I've recognized the reliability factor for one of the most productive trades to participate in, if done correctly and with patience. It took me a few years of stubbing my toes to learn the correctly part and still learning.