Shootin' the Bull about who gets to put on the pounds

“Shootin’ The Bull”

by Christopher B Swift

5/26/2026

Live Cattle:

Due to lengthening time on feed, the additional cattle that showed up placed, will most likely hit in the October time frame. Consumer demand remains a huge question with some saying beef demand remains robust, but others don't have that same opinion. The box beef price, and sluggish movement, leans more towards the second opinion.  For the time being, I anticipate the creation of a huge head and shoulders pattern with the right neck in formation at the moment.  A trade down to the March low's per respective contract month is expected and may produce opportunities to improve hedged positions. 

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​​​​Feeder Cattle: ​

While the on feed numbers grew, some thought that meant fewer cattle. That is not the case, it is that there will be fewer animals for someone else to put the pounds on over the summer.  Hence, begs the question; do backgrounders fight even harder, with more money, to secure inventory, or do they pause, let some pastures rest, dust settle, or maybe even a lower price to help start the herd rebuilding?  If they go head long into driving prices higher, it will simply be more difficult to push those higher beef prices on to the consumer. If prices move lower, I would anticipate a rush to own heifers and cows for herd rebuilding. Until half the summer is over, we most likely won't know. 

What we do know is that half of the years volume is up for marketing through the next couple of months.  The wide basis makes it very unattractive to hedge with futures, and when considering the current discount, and an options premium, it pushes minimum sale floors way down the scale. With recommendations having been made prior to, there are few things that can be done to adjust positions.  I continue to anticipate a decline to approximately $336.00 August. Somewhere in the vicinity, I would look to make adjustments to the position.  It could be taking profits, rolling down to lower strikes, or selling lower strikes to collect premium and form a bear put spread.  The sharp break lower in price is helping to provide some leeway in what to do next.

What to do next is still believed hinged upon the forming right neck line of an anticipated head and shoulders pattern.  A move to around the $336.00 area August would then have me in anticipation of the right shoulder forming that may coincide with the summer video marketing's. If forms, would be an opportunity to wrap up any loose ends or marketing's on newly acquired inventory.  In my opinion alone, the risk now turns to; "What if top is in and there is no rally or formation of the right shoulder?"     

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​​​​Corn:

​All were soft today as energy was soft and rain was abundant across a wide swath of the corn belt.  Soybeans in the Delta will be the big question.  If planted, do they replant, and if not planted, could have a good start with moisture. The loss of the energy trade may be of the most significance.  Without it, grains would stand alone in demand the weather during growing season.  Although both could create a buying spree, the loss of the energy concept may take a while to replace with something equally as bullish.  

Energy:​

​Energy was lower, but sharply lower in both diesel and gasoline.  All remain in an up trend with expectations of higher, until or unless a real peace agreement is made and enacted.  Of the most interest is how little crude sold off as peace negotiations were being touted.  I was expecting $10.00 or lower at the opening.  The ability to start climbing out of the hole suggests there remains some very loose ends.     

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Bonds:

​Bonds and notes were all higher today.  It appears the government is pulling out all the stops to keep rates from rising.  Although I am sure difficult, but at today's recovery high, it pretty much wiped out the losses from the selling that China and Japan did last week.  With another rise in core inflation expected in June's reports, and no subsiding of commodity inflation, consumers will be expected to continue to shift uncomfortably in discretionary spending habits through the summer.  

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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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