Shootin' the Bull in Novel size.

“Shootin’ The Bull”

by Christopher B Swift

5/18/2026

Live Cattle:

Thank you to Craig Purvine, from "The Cattle Range" for permission to use the charts below.  The first two charts below have little to do with predicting price direction.  They are simple reflections of the spreads producers have created the past several years of production.  However you deem these charts, the reflection is one showing significant spreads between weight classes, as well as the feed cost differential, currently at a historic width.  Note the polar opposites of cattle to corn.  Feed use to be a key component of measurement as to how much one could spend on a feeder steer.  With price the only profit factor available, feed costs have been ignored.  It didn't matter what the cost of feed was, the price for cattle was moving higher.  Then comes the spread between the weight classes.  As in the old days, one would calculate the input price for cattle, feed, and other costs that would lead to whether to pay buy them or not.  Again, the price rise seemingly threw out all of what used to be considered factors in cost of gain, for the never ending price advance. As much rationing as has been done in limiting beef supplies and price rises, producers have yet to expand in a meaningful way.  This suggests to find an alternative method to reduce prices.  That has been as difficult as anything with consumer preference still towards beef over competing proteins. 

Recently, drought has been discussed.  Since an increase in beef production, and higher prices to consumers didn't quell cattle prices, it is possible that the drought will.  The volume of sales of stocker and feeder cattle in the month of April was elevated above April of '25.  While I know not all of these will go on feed, due to the higher volume and drought aspects, I anticipate more to have been placed. Friday's on feed report is expected to be over 102 on feed and I believe over 108 placed.  The low marketing number will help to exaggerate this number, but it still appears as more cattle were placed.  How this impacts the longer term production cycle, it is way too early to tell. On the forefront though, the market has wanted more cattle and it appears there are going to be a few more ready for this fall than thought in the first quarter.  As you look at those charts, and how wide the spreads are, know that if you have cattle on feed, you are in the thick of those spreads. 

Cattle feeders have decisions to make whether they want to or not.  At Friday's close, and a three day weekend, cattle feeders will be handed information that could as easily produce a significant price movement lower as higher. The inverted carry of futures pricing, and a starkly positive basis to contend with, leaves cattle feeders with nothing but price and basis risks to assume themselves.  At this point, there is not good way out of this.  Doing nothing simply places 100% of risk and reward squarely upon the shoulders of the producer.  Selling futures will fix the price, but also fixes the basis for which may or may not be able to be offset.  A put option exaggerates the already steep discount of the future, but does limit one to the price paid for the option, does not fix basis and leaves the top side open.  These two produce unattractive marketing areas for the current price being paid.  However much you may dislike previous hedging recommendations of using a fence option strategy, it does produce a marketing window that is much improved over just a futures contract or long put option.  With a great deal of the abnormal fundamentals of cattle and beef production, input costs outside of the cattle, consumer's willingness to pay and cattle supplies noted, I urge to look at the two charts below and gauge whether these trends continue, or potentially reverse. 

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Note it took the lower trading of feeder cattle at the end of October '25 and a new historical price by $7.00 to push cattle feeders back into the black.  They may be able to stay there for a week or two, depending upon current cash, as lower feeders were available to the end of November. The projected margins were no better and even more evidence of how dramatic an impact lower prices may have on producers. 

​​​​Feeder Cattle:

​Backgrounders are urged to pay even closer attention to this matter.  For two weeks, the spreads between starting feeder and finished fat have begun to narrow.  Cattle feeders are taking notice of how poor margins are.  However, the spread between lighter weight cattle and feeder cattle grew wider last week, exposing backgrounders to even more risk.  Like the fats, the price structure of the board, and basis spreads, is detriment, especially when paying top dollar today and nothing but stark discounts in the future. So, you have some work to do. When viewing the first two charts below, backgrounders are faced with similar problems having paid way more for incoming inventory than what they can be sold via futures quotes. As well, they have benefited greatly from cheap corn that may or may not be available for much longer. 

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I recommend you consider tonight how much more risk you wish to assume for the amount of profit potential you wish to achieve.  Hindsight can be as crippling as anything in keeping from making important decisions.  While basis is as tight as it is, attempt to do more in protecting the working capital you have at stake.   

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​​​​Corn:

​All were higher with all three believed resuming upward trends of fledgling bull markets.  How was Trump able to keep so tight lipped about the 17 billion in agricultural trade with China when everyone knows when he burps?  I don't know, but what it appears is that in order to get the full advantage, the shorts had to stay in Friday. Closing on the lows of the day most likely kept a lot in.  To readers though, the break lower was viewed as an opportunity to fix some variable input costs that you know you will be needing in the future.  Fixing variable costs when commodity prices are so volatile appears as a means to reduce some of the volatility.  ​

Energy:​

​A new contract high and new contract high close in July heating oil keeps the bull market very much alive. Crude and gasoline were not left out as both traded higher and believed having resumed their uptrends as well.  Energy broke out from a long sideways trading range with a big gap up and fundamental reasoning for.  It ran sharply higher before consolidating and then moving higher again.  Upon the new highs, further consolidation has been seen with now new contract highs. This leads me to anticipate the bull market still intact with a surge anticipated to above $5.00 July diesel.   

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Bonds:

​Bond traders continued selling through most of Sunday's session.  By the close Monday, bonds had seen plus on the day but closed unchanged.  Bonds have resumed their down trend, just as commodities have resumed their up trends.  It appears both are now trending.  I anticipate inflation to continue to move higher as nothing has stopped or slowed government spending.  ​

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Of interest to some may be a news article from Sunday night's episode of "60 Minutes" on insider trading.  Mostly to do with the PolyMarket, but did lean in on some of the unusual volume that has taken place in the crude oil market recently.  This is another layer of factors to consider when managing your risk.  It is possible that nothing happens to the cattle market, but cattle prices plummet due to unforeseen circumstances, or circumstances beyond our control. You can complain all you want, but once the damage is done, it is difficult to reverse. 

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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.