“Shootin’ The Bull”

by Christopher B. Swift

​5/14/2025

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Live Cattle:

Did the fat lady sing?  Is the jig up?  We will know more tomorrow, but for the time being, the closing of the southern border is believed a bullish black swan event, at the top of the market, for which wasn't believed that big of an ordeal to begin with.  The sluggish attempt to reopen kept inventory moving at a snail's pace.  Dr. Peel suggested that approximately 3% of the years volume comes from Mexico.  Due to a belief that cattle may not necessarily be the objective between the US and Mexican governments reason for shutting the border, I think it possible, if not probable, that were the objective to be satisfied, protocols to open the border would be quick and the cattle flow across unimpeded.  Other than this, the cattle feeder will continue to enjoy record profits at the moment, while contending with how to manage the significant increase in feeder cattle prices and positive basis that grew immensely today.  I expect significant volatility, simply due to the basis spreads.  Prepare for a great deal of exceptional trading as the industry appears to have stopped rationing cattle, and begun rationing cattle producers. Oh, and don't forget about the 6,500 new long contracts created on Tuesday for which all are in a losing position at today's close.  I will be anxious to see if most stayed or left.  

Feeder Cattle:

Over the past 4 years, the higher price of cattle and beef was believed a rationing of to keep from running out of beef.  With beef production stable the past two years, and not much change this year, the rationing of cattle and beef appears to have come to a head.  The most recent price move is believed to be rationing producers.  Nonetheless, watch for an exceptional swing in basis.  As the fat market has already dug and maintained a tiger trap in the fats, the feeder market has a lot of room for such.  If marketing within this weeks high, I expect you to have achieved the highest price to average in for the year.  

If a reversal today, the gap at $284.25 is to be the first objective via August. If a head and shoulders were to form, the right neck line could move to as low as $273.75.  I would expect about the same time frame to make the right neck line as was taken to make the left.  The beneficial basis is eroding now.  It wasn't a lot to begin with, but so significantly better than the fats, it seemed ashamed to not take advantage of.  Today's recommendations from the mid day cattle comment informed readers on what to do and how to do it while the market was open to transact business.  If you are not a subscriber to the mid day cattle comment, contact Shawn Gammon at the office to set this up.   

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Corn:

​Corn was mixed with a little spread trading taking place.  Wheat is just meandering at the contract lows and beans are believed a little bullish.  The shorter acres planted this year and renewed China trade deals could spur beans quite a bit higher.  

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Energy:

​Energy was mixed with Diesel fuel higher, gasoline about unchanged, and crude a little lower.  Energy is believed to have reversed.  Solidifying low input costs to feed or finish historically high priced cattle seems something a business would want to do by owning call options on input costs at strike prices where you no longer wish to assume risk.  Variable input costs can wreak havoc in a very short period of time, even if just a moment of volatility.  The ownership of calls may help producers from having to make spot decisions based upon sudden fluctuation.  Corn and crude oil are well below previous highs and not too far from lows that may be considered as support levels. 

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Bonds:

​Bonds remain lower with today the fifth day in a row of lower trading.  I don't think this is the same hate selling that we saw when the tariff's were first announced.  I think these are entities having to continue to adjust to the massive amount of volatility that has and continues to take place.   Although inflation continues to grow, it is very close to the 2% mark that has been attempted to be achieved.  The President wants a pre-emptive strike on rates to keep from going into a recession.  With a tremendous amount of achievements, this may be one as well.  So, I am looking to buy bonds.  With a slew of reports out on Thursday, how they react to will help to make a more informed decision. ​​

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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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