“Shootin’ The Bull”

by Christopher B Swift

​7/23/2025

Live Cattle:

I appreciate all of the feed back from Tuesday's comments. Rationing continues with further unfolding of the 5th wave.  Basis has tightened some, but futures traders remain reluctant to assume the risk of cattle feeders without a significant haircut. Supply remains the focal point with little regards to beef demand, or outside market's that may or may not influence consumers ability to spend.  If hedged, working capital is being consumed exponentially.  If unhedged, then gains made the first half of the year are believed subjected to the potential for adverse price fluctuation, in a time frame for which seemingly profits are having to be reinvested due to starting feeder cattle prices.  With some expectations that vertical integration has attracted investment money from outside the industry, the competition from is expected to help further strengthen supply chains.  On feed and semi-annual inventory reports Friday are expected to reflect current trade guesses on each.  

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In my opinion, I believe the widening spreads between starting feeder and finished fat helps to confirm the increase of outside investments.  As phenomenal as the record profits are today, it seems that reinvestment projects losses into the future.  Not everyone can work in negative margins for long, and for the moment, it appears complacency of the higher and higher price is leading some to assume greater risks for which may or may not be able to be managed.   

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Feeder Cattle:

Cattle feeders are attempting to gain market share.  They are bidding higher and higher for what appears to be a great deal less inventory than the 2% decline government reports show.   My hypothesis is that the reduction of the herd size is about the 2% anticipated, but the lower volume of sales of reported stocker and feeder cattle, and consistent on feed numbers to be due to increased captive supplies.  Hence, it may be that the general cattle feeding public is in heavy competition with those seeking to gain substantial market share, not just a few more pens. With still a great number of cattle fed independently, or on a smaller commercial scale, the squeeze is believed impacting them the greatest. This leads to an expectation of reduced feeding capacity.  Then, there remains the 700K head of cattle from Mexico that would help to undermine the grip currently being held.  It is obvious why the border needs to be opened for Texas, New Mexico, and Arizona feed yards, and as obvious why some want it to remain closed.  Supply is the issue, therefore the 700K head of supply would be anticipated to resolve or reduce the current issues of such great capital requirements to produce a pound of beef. 

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The August feeder cattle contract has limited time now.  I recommend for a purely speculative trade to buy August at the money feeder cattle puts.  This is a sales solicitation.   

​Corn:

All turned lower by the close.  Corn is believed resuming a down trend with beans and wheat simply holding their own.

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Energy:

​Shrugged off a lower start to the day.  I anticipate energy prices to continue higher.  Diesel fuel took a back seat to gasoline, but the spread between the two had widened significantly in the favor of diesel.  I recommend topping off farm tanks or booking some fall harvest needs. 

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Bonds:

Bonds are forming a congestion area in about a 6 point range.  Bonds have been exceptionally volatile with not much expected direction wise due to the stagflation being more prominent than inflation or recession.  

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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.

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