livestock options recap

By: PJ Quaid, Senior VP, Agricultural Commodities

Fri, 23 Jan 2026, 20:31

The January Cattle on Feed report was largely neutral to slightly supportive. Cattle on feed as of January 1 came in exactly at expectations at 96.8% of last year, marking the lowest January inventory level in nine years and reinforcing the longer-term tightening trend in feeder supplies. December placements were modestly above expectations at 94.6% but still represented the lowest December placement level in a decade, underscoring continued constraints on feeder cattle availability. December marketings were slightly higher than expected at 101.8% and the highest in four years, reflecting aggressive front-end marketings and strong packer pull. Overall, the report confirms smaller inventories, limited placement flow, and ongoing leverage for the fed cattle market as 2026 unfolds.

Today’s dollar weakness and accompanying strength in commodities may partly reflect shifting expectations around future Federal Reserve leadership. Market participants increasingly view Rick Rieder’s emergence as a potential Fed Chair as indicative of a more market-sensitive and growth-aware policy approach, with greater emphasis on financial conditions and less tolerance for prolonged restrictive real rates. That perception supports a softer dollar outlook and is constructive for commodities, which tend to benefit from lower real rate expectations and improved global affordability. While broader macro and positioning factors remain at play, Rieder’s rising profile appears to be reinforcing the move and adding confidence to the trade.

German Chancellor Friedrich Merz is pressing the European Union to provisionally implement the long-delayed Mercosur trade agreement, arguing that Europe can no longer afford delays as global trade becomes more fragmented and competitive. While the public case centers on urgency, competitiveness, and democratic legitimacy, the underlying driver is economic self-interest. Germany runs one of the largest trade surpluses with the United States, making preservation of the current trade framework highly advantageous—much like China, which also benefits from the status quo. As U.S. and Chinese trade strategies become more assertive and transactional, surplus economies are moving quickly to lock in market access and supply-chain flexibility. Framed as a strategic necessity for Europe, the Mercosur push is better understood as an effort by Germany to protect its export-led model and reinforce favorable trade dynamics before political and legal resistance can slow the process further.

Precious metals extended their surge, with spot silver breaking above $100 an ounce for the first time, underscoring the intensity of the current safe-haven bid across hard assets. Strength in silver is being reinforced by record-setting gains in gold, a weaker U.S. dollar, and rising geopolitical and policy uncertainty, which continue to drive capital toward inflation hedges and stores of value. The move also reflects growing investor concern around monetary credibility, fiscal trajectories, and global trade fragmentation, pushing metals into price discovery mode after years of constrained supply and rising structural demand.

January University of Michigan consumer sentiment was revised higher in the final reading, rising to 56.4 from a preliminary 54, modestly above expectations. While sentiment remains historically depressed, the upward revision suggests some stabilization in consumer confidence late in the month. Importantly for markets, one-year inflation expectations edged down to 4.0% from 4.2%, easing concerns that elevated inflation psychology is becoming further entrenched. The combination of firmer sentiment and slightly lower inflation expectations leans marginally supportive for risk assets and helps reinforce the view that disinflation progress, while uneven, has not fully stalled.

China’s outreach to Brazil highlights Beijing’s determination to preserve the current multilateral, rules-based global order at a moment when U.S. policy is shifting toward a more bilateral and enforcement-driven approach. China has been a direct and outsized beneficiary of the status quo, leveraging open markets, limited trade enforcement, and global institutions to scale exports, secure critical supply chains, and expand geopolitical influence. Its emphasis on “global unity,” the Global South, and the central role of the UN reflects a clear effort to defend a system that has underpinned its economic rise. Brazil, under Lula, fits naturally into this framework as a key commodity supplier and multilateral advocate. The message is less about ideology and more about preservation — China will actively build coalitions and promote globalist rhetoric to protect an international structure that continues to work decisively in its favor.

Hogs

Bought 250 Feb 88 puts paid .60 up to .70

Sold 100 June 106/102 put spread @ 1.325

Bought 250 Feb 83 puts paid .10

Bought 400 Feb 84 puts paid .1250

Bought 250 Feb 85 puts paid .175

Bought 350 Oct 70 puts paid .55

Bought 500 June 120 calls paid 1.0750 up to 1.10

Bought 400 April 96 puts paid 3.05 covered 96.125

Live Cattle

Bought 200 June 232 calls paid 8.10 up to 8.20

Bought 200 April/June 230/226 put spreads paid 2.50

Bought 250 Feb 224 puts paid .55

Bought 100 April 232/225 put spread v. 245 calls .25 up to .30

Sold 100 April 222 puts @ 2.50

Sold 4000 Feb 224/216 put spread @ .20 down to .15

Sold 3500 April 224/214 put spreads @ 1.20 down to 1.075

Sold 700 April 223 puts @ 2.70 down to 2.10

Sold 200 Feb 230 calls @ 4.05 down to 3.225

Bought 400 Aug 226/204 put spread paid 5.70 up to 5.90

Bought 150 April 216/200 put spread paid .675

Feeder Cattle

Sold 1200 May 320/290 put spread @ 2.65 down to 2.475

Lean Hogs
Month	Futures	Change	Strike	Implied Vol	Change in IV	Futures Range	Implied BE	Realized BE	20D Historic Vol	Days to Exp
LHG6	88.350	-0.125	88	10.2	-0.10	0.63	0.57	0.98	17.53	26
LHH6	96.175	-0.175	96	18.0	0.00	0.85	1.09	1.09	18.07	49
LHJ6	96.175	-0.175	96	17.0	0.00	0.85	1.03	1.09	18.07	84
LHK6	99.550	-0.225	100	17.5	0.10	0.58	1.10	0.90	14.34	115
LHM6	108.500	-0.125	108	17.2	0.20	0.63	1.18	0.78	11.39	144

Live Cattle
Month	Futures	Change	Strike	Implied Vol	Change in IV	Futures Range	Implied BE	Realized BE	20D Historic Vol	Days to Exp
LCG6	234.900	2.525	235	13.7	-0.30	5.10	2.03	1.93	13.06	14
LCH6	236.925	2.100	237	14.2	-0.30	5.50	2.12	1.92	12.89	42
LCJ6	236.925	2.100	237	14.4	-0.30	5.50	2.15	1.92	12.89	69
LCK6	232.500	1.600	233	15.2	-0.10	4.88	2.23	1.82	12.42	98
LCM6	232.500	1.600	232	15.2	-0.10	4.88	2.23	1.82	12.42	133

Feeder Cattle
Month	Futures	Change	Strike	Implied Vol	Change in IV	Futures Range	Implied BE	Realized BE	20D Historic Vol	Days to Exp
FCF6	364.800	1.075	365	8.8	-0.90	5.07	2.02	2.85	12.42	7
FCH6	360.175	0.900	360	16.1	-0.20	7.10	3.65	3.67	16.18	63
FCJ6	358.750	0.800	358	17.0	-0.30	7.00	3.84	3.74	16.55	98
FCK6	356.050	0.575	356	17.2	-0.40	6.90	3.86	3.71	16.55	119
FCQ6	355.325	0.400	356	17.3	-0.30	6.78	3.87	3.57	15.94	217

sources
news bloomberg

options data globex

tables bloomberg

Meats & Livestock

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Perspective: Morning Commentary for August 6

August 6 – This morning’s stronger-than-expected U.S. labor data offered markets some relief, reinforcing confidence in the economy while giving the Fed greater flexibility to raise rates should inflationary pressures reaccelerate in next week’s July data. Stock futures are pointing to a mixed open to start the day, with the tech-heavy Nasdaq showing the most weakness. The VIX has fallen notably from yesterday’s spike above 18.4 as it starts the day hovering just below the 16-mark. The dollar is quietly higher as it trades just above 99.8, holding in the tight range seen thus far this week as traders continue to digest data to shape expectations for the Fed’s next move, which we’ll dive into in more depth below. Long-term treasury yields have relaxed slightly from their recent spike, with 30-year yields starting the day trading just above 5.19%, while 10-year yields trade above 4.64%, and 2-year yields sit below 4.22%. Crude oil is modestly higher to start the session after sharp declines earlier in the week, with nearby WTI up 1.8% to trade at $76.40 and nearby Brent up 2.4% to trade at $81.40. Meanwhile, the ags are quietly mixed to start the day.

Mike CastleThu, 06 Aug 2026, 13:24

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Perspective: Morning Commentary for August 5

August 5 – U.S. equities markets are on fire this week, with both the Dow Jones and S&P 500 setting new all-time highs yesterday with futures indicating further gains again today; the marketplace remains optimistic over a deal with Iran despite no evidence of such as of yet. Crude oil is working on a lower high and low today but remains slightly on the high side on the session, while the dollar is retreating back towards Monday’s nearly two-month low. The ten-year note is steady-to-lower this morning (though solidly lower so far this month) at 4.605%, while the VIX index continues to rebound into mid-week at almost a 17-point reading this morning.

Matt ZellerWed, 05 Aug 2026, 12:39

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Perspective: Morning Commentary for August 4

August 4 – The benchmark Dow Jones Industrial Average surged into the close yesterday to finish almost 700 points higher, at a record close of 53,178 points – easily clearing the previous top from almost a month ago. The S&P 500 is on the brink of its own record as well, while the NASDAQ index is short of June highs but working on a strong three-session rally. All three are pointing to positive openings today. Palantir (a U.S. software company) reported better-than-expected earnings yesterday afternoon post-close to boost the tech sector, though a host of other firms reported strong earnings as well. The ten-year note continues to retreat from Friday’s high, now at 4.67%, with the dollar on the high side of level-par, while the VIX index now under 16 shows reduced volatility.

Matt ZellerTue, 04 Aug 2026, 12:43

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