“Shootin’ The Bull”

by Christopher B. Swift

​5/27/2025

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Live Cattle:

Regardless of today's rumor, hoax, misprint, truth, or whatever the case may be, it shows how fragile the cattle market has become.  With last weeks factors of new historical highs for nearly every weight category of cattle, all fresh beef price, hamburger price, box price, and retail price, it states that every participant needs to pay more.  A stagnation in price would have margins erode quickly due to the ever higher feeder price paid when placed.  A lower price would see margins collapse.  Only a higher price for fat cattle and beef will suffice in sustaining the current profit margin. 

With last weeks comments on rolling up put option strike prices and entering into new positions for acquired inventory, most producers should have had a head start on today's volatility.  Today's price action is expected to keep option volatility premiums elevated, with all eyes on who did or did not say what, where they said it, and did they do it with malice intent.  In my opinion alone, and in no way to be confused with fact, but today's events and recent price action, exposes duress and desperation as the rationing is beginning to take a toll on some.  

Feeder Cattle:

​Backgrounding is the sector for which the most beneficial work can be done.  The basis remains favorable in this years contract months, but is slipping considerably in next years. Prices for both cash and futures remain less than $10.00 from contract or historical highs.  Today's price action is a good reminder to attempt to do as much as possible when conditions are favorable, keeping from having to make rash decisions that tend to elevate price paid or risk assumed.  

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Until or unless $301.20 August is exceeded, I anticipate a series of waves lower in price.  If exceeded, then rationing will take another huge swath of producers out of production.  For now, I think some accomplishments in vertical integration have taken place.  At the highs, it may not be as beneficial to continue to push an agenda.  Higher fat and dressed prices for finished cattle were barely higher than the week before, even with a slightly higher cash trade.  This means that feeder cattle prices when placed were even more elevated.  Feeder cattle prices are $25.00 to $30.00 higher today than in January.   A portion of the agenda may be to see who can remain in production at these price levels with so much working capital at risk.  As above, it appears that duress and desperation are at hand for some producers.  

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Corn:

Corn and wheat were lower with beans pretty much steady.  The abundance of moisture in the south and south east is expected to keep bean planting slow, if not at a halt until river bottoms dry.  Along with 4.5 million acres less, I continue to recommend buying November beans with a sell stop to exit only at $10.10.  This is a sales solicitation.  Corn farmers are believed a little nervous with new crop corn trading sideways and the additional acres planted this year.  However, poor growing conditions are more the norm than good or excellent growing conditions at the moment.   

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Energy:

Energy was soft today.  I expect energy to firm. 

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Bonds:

​Bonds were sharply higher after last weeks new contract lows were made. ​  At present, I don't feel as if this is a reversal, but a correction of significance with still a greater propensity of stagflation than declining.  Recall that commodity inflation, barring beef and cattle, is literally nowhere to be found. 

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 “This is intended to be or is in the nature of a solicitation.”  Futures trading is not for everyone. The risk of loss in trading futures can be substantial; therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not indicative of future results, and there is no assurance that your trading experience will be similar to the past performance.