“Shootin’ The Bull”
by Christopher B Swift
2/12/2026
Live Cattle:
A recovery off the low, and technical indicators turning higher, will be anticipated to further embolden cattle feeders. The front end of cattle on feed is elevated greatly with long fed cattle. Packers remain backed in a corner and bleeding money profusely. The polar opposites of each, and both unable to live without the other, is increasing the risk that one will become overly extended, or the other side contracts violently. A higher cash trade will be anticipated to quicken the reduction of processing capacity. A lower cash trade and producers may begin to see the first negative returns in months, if not years.
Feeder Cattle:
With the index having been unable to punch through the current ceiling, it leads me to believe producers need more money or more incentive to assume the risk of additional working capital. Futures traders are merely trading around the basis with not much real impact on the market while trading sideways. Of the most important aspect is what to do going forward. I fully understand and acknowledge that cattlemen were told market conditions, from a supply of cattle standpoint, will remain good for a year, if not more, from analyst's projections at the NCBA show. Most though believe that the first quarter or first half of the year would be our lowest numbers. The futures market is already taking this into consideration with steepening discounts as new contract months come on the board. This begs to bring back up that in 2022, the December of '25 contract month, at it's contract high, remained the contract high to expiration 3 years later. I contend that the highs made recently in the back months, and into next year, may well be the contract high, and highest price ever to be achieved when future time frames arrive. With a chart being passed around on the social platform X, overlaying charts between cattle production and beef production, it is staggering that cattle are so high with beef production so great. So, begs the question, with it unlikely that beef production will go down when cattle production goes up, what will the end results be? My opinion is it will look similar to December of '25 corn where contract highs were made well in the past. Lastly, there is little one can do about it. The discounts of futures are there because futures traders are not anticipated to push prices so close to cash, that a massive transfer of risk may take place. When basis is wider, it simply gives more room for buyers to the index. When it tightens, it offers a narrower basis window to market into. For the moment though, futures are foretelling of lower prices and cash can't seem to break through a ceiling barrier. Producers are believed to be emboldened, and without sufficient downside risk management applied.
Market share is believed still a main goal for some, and that is one of the causes for price to remain elevated. Due to the lower volume of cattle available, bidding inventory away from competitors is a way to accomplish such. The flip side of this is that fewer participants increases leverage greatly. Any issues of over leveraged would be anticipated to be exposed quickly were prices to turn south, or a reduction in production capacity. I continue to expect the unexpected.
Corn:
Corn remains dormant, but was able to trade higher today. With a first round of marketing's for corn and beans, I'll wait for further evidence of a trend forming in one direction or the other. This may be a way too low of marketing price, or could well be the start of a lower average. Soybeans continue to benefit from the Trump bump. Corn is in desperate need of such. In my minds eye, a higher corn price would go a long way in helping to keep from subsidizing farmers. Domestic demand is needed.
Energy:
Energy has been lower for most of the day. On again, off again saber rattling with Iran keeps energy volatile. I continue to anticipate a higher trade and recommend topping off farm tanks and booking a percentage of your spring fuel needs.
Bonds:
Bonds were sharply higher as a flight to quality is believed being seen from the extensive movement in metals and seemingly lack of ability to punch through a ceiling, similar to feeder cattle. More money is needed, and with the loose monetary policies of the US and China, inflation continues to be anticipated more than deflation. As well, since the equities market lives on money, it could use a shot of pretty quick. What could be of significant interest would be that if further stimulation is provided, and the market doesn't react, it may be too much, too late. If it has to keep being stimulated, something is already wrong.
“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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