“Shootin’ The Bull”

by Christopher B Swift

​10/7/2025

Live Cattle:

There is little to add to the story.  Cattle feeders are fighting tooth and nail to bring inventory into their pen space, so their competitor won't.  I know of no other way to consider this, but am open to other ideas.  Government intervention has accelerated an already tense situation this year.  I anticipate further government intervention to do the same going forward.  What I really want to know is what the USDA will do when the screw fly is actually on US soil.  These are the protocols I would like to know about before we have to find out, when in a more precarious situation. 

For whatever reason, the futures trader has not only taken the lead, but provided enough premium to work with, that cattle feeders can forego risk of potential downside price fluctuation at a near even basis, while allowing for a predetermined amount higher that may or may not be at a new historical high for fat cattle.  I have no idea to what extent price can be discovered in attempting to retain a seat at the table.  What I do know is that it is becoming more difficult to push higher beef prices on to the consumer, leading to more of the price risk assumed within the cattle feeding sector of the industry.  There are actions that can be taken and we can help to facilitate those actions, you just have to decide how much of the risk you have assumed do you wish to continue to assume, and how much are you not, and what are you willing to pay for the amount you are unwilling to assume. ​

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Feeder Cattle:

Futures traders have done backgrounders a solid the past few days by not only shoring up the basis to within a very reasonable amount, but produced new contract highs, or contract high closes in the spring months. As above, I have no idea as to the extent one will go to, but we are finding out each day. With the new highs, less futures participation in the form of open interest, and to some extent, producers stretched pretty thin, I recommend you lock in spring marketing's with a fence options spread that will help to moderate the basis spread and produce a minimum sale floor that may or may not be available to you in the future. This is a sales solicitation. ​

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Lenders are believed knee deep in the cattle business now.  Helping clients manage the extensive capital outlay is no easy task whether using risk management tools or not.  If not, then the lender is at full risk of the clients ability to manage risk.  If so, then the lender has three benefits to consider.  One is helping the client with enough liquidity to conduct business in a manner that keeps capital restrictions from enabling the client to make the best marketing decision.  Two, it can provide a direct impact to the lender through the use of "Assignment of Futures Contracts", that gives the lender a security agreement on the hedges of the client.  Lastly, the business of lending money is to lend money and the cattle market is consuming a great deal of money in both production needs and management of potential adverse risk.  Due to the investments being made into a commodity production market, and historical proof of significant price fluctuation, I recommend you do everything you can to either learn more about how to manage potential adverse price risk, or continue to provide clients with the working capital needed to protect what has already been lent.   

​Corn:

As utterly ridiculous as this may sound, but I want to own corn.  I recommend buying July corn between $4.50 and $4.40 with a sell stop to exit only at $4.28.  This is a sales solicitation.  I recommend buying the July at the money, or $.10 to $.30 out of the money calls.  This is a sales solicitation.  I think that cattle have climbed a wall of worry and are sitting on top of that wall.  I think the corn market as an even steeper wall of worry to climb and may have only created the first step of a possible journey higher.  I have no idea how, but the chart pattern suggests, a wave 1 has been made with wave 2 unfolding.  A new contract low will void this wave count and a trade above $4.64&1/4 July will help to confirm it. 

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I recommend owning the $12.00 November '26 soybean calls.  This is a sales solicitation.  Pork and poultry producers are urged to use the multi-year lows in soybean meal to hedge future feed needs.  This is a sales solicitation.  

Energy:​

​Energy ended the day higher, but spent most of it lower on the day.  I anticipate energy prices to soften more than strengthen, given the shift from an inflationary aspect to more of a recessionary aspect.  ​

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Bonds:

​Bonds were higher because the Biden era of money printing has been distributed and now floated to the top of the economic tier like cream from milk.  All that is believed left is skim milk and the lower tier is hungry for more government assistance.  Whether a hand out to the general public, further interference from the government, or more subsidies to farmers, the government is expected to throw several more monkey wrenches into the cogs and sprockets in hopes of helping, when actually may be of more harm.  Watch for sparks, grinding noises, and potential screams as signs of the train going off the rail.   ​

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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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