Shootin' the Bull about extent of working capital to manage

“Shootin’ The Bull”

by Christopher B Swift

7/01/2026

Live Cattle:​

Basis is wider than last year, and immensely wider than the 5 year average.

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Cattle feeders are laden with working capital to manage, whether personal or borrowed.

We cannot eliminate the risks you have assumed, but have the ways and means to help manage it.

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A close of the week below $241.90 August will overlap the intermediate wave 3 high of major wave 5 made on 8/29/2025.  

​​​​​Feeder Cattle: ​

Significant inventory will be marketed over the next 6 weeks through multiple video sales. To manage the risk of potential adverse price fluctuation until the gavel slams, buy the at the money August put option and sell it the day you market your inventory.

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Procurement at the upper price levels expose the new owners to basis and price risk.  I recommend fixing the price risk with an at the money put option and leave the basis open until a more advantageous spread is available.  

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Do not be surprised by the premiums paid for the options.  Get used to it because they are a percentage of the value of the contract and the contract has not been much bigger.    

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​​​​Corn:

All three remained higher on the day.  I am unsure this is a bottom, but with recommendations having been made to own corn call options in the month needed for delivery, at strike price levels you no longer wish to pay for corn, it doesn't matter.  ​

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Energy:​

Mixed results today with little to comment on. 

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Bonds:

​Bonds were sharply lower.  There is little question about inflation, just how to manage it, or how much more of it there will be. 

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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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