Shootin' the Bull about the next most probable move.

“Shootin’ The Bull”

by Christopher B Swift

4/02/2026

Live Cattle:

Due to the shortage of inventory, cattlemen in every sector are believed entering into widening negative margin spreads at inception of production. This exposure, of too much production capacity for the number of animals, has already caused rationing in the packing sector, and a fledgling move in the cattle feeding sector.  Other than that, it appears the number of producers are the same and fighting tooth and nail against one another for ownership. Price may move higher or may move lower, but the next most probable move in the industry is to cut production capacity.

Expana posted an article stating the improvement of Mexican production and processing of cattle this week.  This has led to more Mexican beef being imported to the US.  So, a lot of US cattle feeders, that worked with Mexican cattle, are no longer able to, but the Mexican producers have utilized the situation to be efficient in production and now bypassing US producers and just selling beef to the US.  Most of this is expected to be Select grade and will be of benefit to those in beef production. Not cattlemen though.  This is to note that high cattle prices are influencing others to produce a like product as the US in the attempt to steal US market share.  South America continues to be an intergal part of beef consumption in the US. They to are believed attempting to garner market share away from US producers.  Long way around the barn to say that cattle prices are influencing others that can, and will produce a cheaper product that is expected to impact US beef and cattle prices. All of this taking place while producers enter into widening negative margins of production. ​

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Feeder Cattle:

No different here.  Widening spreads between feeders and fats today pushed the starting May feeder/October fat spread to $133.02, approximately $2.55 from widest width of contract months.  These spreads are at the same widths that are producing today's sharply negative closeouts. With no more cattle, and the same number of producers, it is anticipated that producers begin to consume one another.  Hence rationing at the production level, outside the feedyard. Drought may be a culprit that impacts the best laid plans.     

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​Corn:

Corn and beans ended softer today, after a higher opening.  I recommended to buy the December corn with a sell stop to exit only at $4.70.  This is a sales solicitation.  As a component of energy and still not even in the ground yet, corn is one of the cheapest commodities on the board, and of the greatest need to cattle feeders.  If one is going to continue to subject themselves to higher input costs of cattle, do something about the feed.  

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Energy:​

However quickly, or long, the military actions in the Middle-East last, the damage of infrastructure and shift of the world in how, when, and who they buy oil from is done.  There is no putting the rabbit back in the hat on this one.  As the US moves towards planting 180 million acres and military action incomplete, I have no reservations about further new contract highs in the energy markets.  Crude and diesel have already made new contract highs today with more anticipated.  Due to the volatility, and potential influence from the President, diesel could as easily be a dollar lower or higher come Sunday night's opening. Of interest to me is China.  They have a front row seat to US military strategy, might, and estimation of how much munitions are being spent on Iran, and the performance of.  They have been quiet, and that is bothersome.  I continue to anticipate unintended consequences from these actions, but there is a plethora to choose from as to what they may be. ​

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Bonds:

​Bonds and notes were plus on they day, but not by much.  With inflation soaring, as evident by new historical highs in the Dow Jones Commodity Index, and the government stimulating at every turn, interest rates are anticipated to continue higher with more government printing of money.  I think it possible that were long term rates to crack over 5&1/2%, you could see a large rotation of capital out of the equities market and into long term bonds for some the baby boomers to finish out their life expectancy on a fixed rate of return, instead of at risk in equities. 

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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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