“Shootin’ The Bull”
by Christopher B Swift
2/17/2026
Live Cattle:
Futures traders were quick to shore up the basis after Friday's higher cash trade. Futures traders are not anticipated to swap basis to negative, but until the cash breaks, will most likely keep a calculated distance. It is thought that were basis to go negative, allowing producers to market at a higher price into the future, there would be an enormous transfer of risk from producers to the futures market. The seasonal tendency lower should have started today. If it did, it started on a high note. Of interest to me is that when shown on a close only chart, there are 5 waves up from the 2/5 low on April and out contract months. As well, the close is a new high close from the December '25 low. When coupled with the seasonal tendency, this would be considered another top, but still maybe not "the" top. The high price of feeder cattle in September of '25 is coming into play with last weeks closeout's negative by over $50.00, with projected losses of over $400.00. Combine this with packer margins deep in the red, and something dramatic is on the table with two major portions of cattle and beef production in the red.
Feeder Cattle:
When viewing the charts on the Cattle Range weekly summary, what stood out the most is the spread between lighter weight cattle and heavier ones. Until 2023, there was very little fluctuation between the spreads of stockers, feeders and fats. Towards the start of '23, the price for lighter weight animals began to trade at a sharply wider spread to feeders and especially to fat cattle. From rough calculations, it appears that stockers are near $480.00 and fats last week at a $245.00 average suggests stockers are trading nearly 2 to 1 against fed cattle. Long way around the barn, but each heavier weighted category is increasing in negative margins. I am unsure how an industry works if most of the participants are in negative margins. Today, it is being held together by the packer and their continuance of bidding higher to meet beef obligations.
Backgrounders are now believed in a similar spot as cattle feeders when looking at projected margins. The price being paid for stockers and calves is significantly higher than the CME feeder cattle index in previous months. When coupled with a hefty basis to contend with, backgrounders are believed in a similar position as cattle feeders, the price has to go up. It is on the verge with today's CME index reading less than $.50. There is no doubt in my mind that producers can push prices to new highs in the attempt to garner more market share or remain in the cattle business. Whether they will or not is the question. Regardless, backgrounders are the ones believed in the most precarious spot, simply due to the spread between what they buy and what they sell. Long way around the barn to make you think more about marketing, as you are procuring the risk. The spread is wider between lighter weight cattle and feeders, basis is positive and sharply in some cases and any option price protection will cost upwards of 4 to 5 percent of the value of the contract. So, think about the future while you are procuring at present at the highest price in history with only discounts to market into.
Corn:
Corn and wheat were lower today. Beans were a little higher and bean oil closed within 1 tic of contract high close. I anticipate bean oil to continue to trade higher. This may lend support to beans, and meal will be the red headed step child. With last weeks marketing recommendations, I'll hope for higher prices and be ready to average down were December corn to trade under $4.45. Remember, without stellar demand, a crop failure, somewhere around the world, will be needed to chew through the current stockpiles of corn. That is not a good marketing plan to hope someone else misfortune becomes yours.
Energy:
Energy wasn't volatile today, but simply produced a significant rally and then took it all back. There was very little back and forth trading. This hinged mostly on the talks with Iran. With energy down on the day at the close, it appears the talks went well. Unfortunately, this is a situation that has to be kept up with. Without the saber rattling, I would anticipate energy prices to soften. With more of, the price rise. With expectations of more inflationary economic aspects, discussed below, I consistently ask my self if this will create commodity inflation, or dampen it. There are only two commodity markets at highs, livestock and metals. Metals are not involved in consumers day to day living, but livestock, or the meat they produce, is. So, livestock appears as the outlier in the commodity markets.
Bonds:
Bonds continued to move higher as the Fed is going to stimulate the economy by billions over the next two weeks in new short term debt instruments. The easy money policies of the US and China are expected to keep core inflation high, as both are in the money printing business at the moment.
“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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