Shootin' the Bull about what to be prepared for.

“Shootin’ The Bull”

by Christopher B Swift

6/25/2026

Live Cattle:​

After today's trading activity, what to be prepared for is the price being paid for new inventory and potentially not the support of the rest of the industry for doing such.  Futures traders were picky as to when and by how much they wanted to narrow basis.  At the close, the basis is awful in the fats, even at near contract high.  New highs for feeder cattle this week is widening the spread further between cattle on feed and beef, to all other weight classes below.  All in all, cattle feeders simply increased capital outlay to manage.  Why, is the question, and the only answer I have is that vertical integration forces those within to assume risks they may or may not ordinarily take when outside of. Having read and listened to multiple comments that mirrored the above, leads me to believe some producers are stretching for the last fruit at the top of the tree, standing on a dead limb. 

Packers need more beef than fat now.  There is plenty of fat, and imports have been staggering for the grind.  Cattle feeders are paid the same money for fat as muscle when still alive.  Were packers to ever start docking for fat, it would be a factor to cause great need to keep marketing's more current.  It would then potentially force cattle feeders to have to market sooner.  Recall that both cattle feeders and packers are balancing production and procurement to keep one side from gaining further advantage, or the other side relinquishing of.  

Cattle feeders are on the cusp of having to sit through approximately 6 weeks of video sales for which the industry is promoting like nobody's business.  The hype for is immense, and cattle feeders will be subjected to bidding against those that "have" to buy cattle, or lose their place in vertical integration.  If you are in jeopardy of having to procure inventory in these sales, I recommend you own the at the money, to $10.00 out of the money call on the August contract. 

For cattle on feed, with a terrible basis, but near proximity to contract high, I recommend owning the at the money put.  A trade higher will help to converge the basis and limit the spread to the premium paid for the option.  A trade lower, and one could look at selling puts at strike levels that you would resume the risk of further price decline.   

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​​​​Feeder Cattle: ​

I think this is the spread where producers will stretch themselves thinner than the underlying factors will support if going to continue to bid higher.  For those marketing into this historical price, one can fix a price with limited risk of 100% of option premium, continue to benefit from higher prices, with expectations of some premium still available when the gavel slams on your load.  Other than this, read the above again and make sure you are not the one extending yourself too far, when the appearance of support for in the future is questionable.  

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​​​​Corn:

All ended plus on the day.  Were the President to dole out more subsidies to farmers, it reduces their need to sell.  With so much selling already having taken place, and corn having made a new contract low today, I anticipate a reversal in corn with a fledgling start to a resumption of the up trends in beans and wheat.  

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Cattle feeders and backgrounders are urged to be paying attention to the polar opposite spread between feeder cattle and corn.  At this price level for corn and feeder cattle, just simply do something that will be of benefit to your operation were future prices to not be what they are today.  If still moving in the current directions, there would be little cause for concern.  Were there to be reversals, having done something at these levels may help to ease some of the dislike many have had for futures and options caused by hindsight.   

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Energy:​

Energy was higher today with Iran testing the President's resolve.  I have tried to keep from saying this, but the issues may not be over with, or worse, this could be the eye of the storm.  Due to volatility and price expanse, recommendations come with a lot of room for error.  Nonetheless, farmers and ranchers have to have diesel fuel, so consider topping off farm tanks before the weekend, or attempt to make your best forward contract on fall fuel needs.  

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Bonds:

​Bonds were higher, but ended a little soft.  Equities are soft after what appeared to be encouraging economic data.  Like the cattle, equities have gone through a great deal of hype with the IPO's and artificial intelligence.  With the chart pattern showing the potential for a right neck line, and a lot of the bullish news out, buy the rumor, sell the fact, comes to mind. 

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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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