Shootin' the Bull about picky traders

“Shootin’ The Bull”

by Christopher B Swift

6/23/2026

Live Cattle:​

Traders continue to be picky as to when, and by how much, they converge basis on any given day.  Today was most interesting as there was a "buzz" about higher cattle and the top was fixing to be blown off.  Futures traders may have done their work on Monday in preparation for, but nothing seemed to happen today, and traders didn't see a need to assume risk at the higher level.  Packers are the same way, they have cut kills drastically in the attempt to not have to assume more risk of paying more for cattle, and potentially unable to market as beef higher. Cattle feeders have been attempting to resist paying higher prices.  Whether they can actually make a dent in lowering price has not been seen yet.  I will say though that the impact of Mexican border closure, and seemingly a heck of a fight between associations, local, state, and federal government agencies, is not helping cattleman in the impacted areas at all.  So, it is possible, maybe even probable, that some production capacity will be taken out. Worse case scenario would be the President having to come in to resolve the issue. So far, he has not been as much of a friend to the farmer and rancher as he made himself out to be.  Grains plummeted with no new trade deals with China, and last September when he stepped in, it caused a $81.00 drop in about 6 weeks. 

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As a cattle feeder, if you have concerns over what prices may do during the video sales, I recommend doing opposite of what I have recommended the producer to do in protecting a price of their upcoming marketing time frame.  That being, buy the at the money August call options. If you think cattle feeders will "have" to bid higher, or "want" to bid higher, this is a way to participate.

From a speculative stand point, if you believe that feeder cattle will make it to $400.00, I recommend buying the August $380.00 calls, that closed at approximately $3.82.  This will give everyone a chance at participating, or for some, probably doubling up, because many believe the price for cattle can't go down.   

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​​​​Feeder Cattle: ​

As a backgrounder, or simply marketing inventory into the summer video sales, read the above again.  You have been granted an improved basis, and move to near close proximity to contract high, as well as cash high.  Your sales may be the one for the year, and being bullish to the point of not practicing risk management, especially so well defined, may leave you very exposed to the elements. All of the above sounds similarly to talking out of both sides of my mouth.  You are correct.  As long in the tooth this market is, it may or may not find a growth spurt from somewhere. In the same breath, as long in the tooth this market is, it may or may not be able to sustain the higher price.  Either way, backgrounders have opportunities afforded to them that cattle feeders don't in managing risk at narrower basis spreads. As you can see, the risk is phenomenally elevated due to both sides of the supply/demand equation in full spectacle for all to see.  Where does your risk lie?  Where ever it is hiding, or in plain sight, you have the tools, means, and ways to manage the potential for adverse price fluctuation, whichever direction that may be. 

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​​​​Corn:

A couple of bean contract months closed plus, other than that, grains were lower.  I anticipate a new contract low in corn and maybe a new low in wheat, but not contract.  I do believe that were these new lows to be made, it will be bringing the bottom closer than seeking lower levels.  I believe the commodity funds have added to their short position.  Were something to change and bring about a bid, the funds would be anticipated to help exaggerate the change. I recommend producers start laying out plans to own call options in time frames of need, and at price levels you no longer wish to pay for feed.   

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Energy:​

Energy is mixed with oil and gasoline lower and diesel fuel higher. A near double bottom in the August heating oil is believed producing some support.  A correction up to $3.30 to $3.40 August is anticipated. ​​​​​​​​​​​​​​​​​​​​​​​​​​​​

Bonds:

​Bonds are higher on the day.  Not by much and seemingly non-responsive to today's weakness in the equities market.  Speaking of which, note the potential formation of a head and shoulders pattern on the September S&P mini futures. Although the H&S pattern in the cattle got a crick in its neck, this one may not.  

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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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