Shootin' the Bull about volatility

“Shootin’ The Bull”

End of Day Market Recap

by Christopher Swift

​3/4/2025

Live Cattle:​

When the volatility soars, it is nice to watch and not have to participate.  At this juncture, time is what is needed.  Time to let the manipulation, in every sector, that has taken place to form a new fundamental.  Woefully too much processing capacity, facilitated by the exceptional government spending, has come back to haunt the cattle market.  The newly formed lines of vertical integration over the past two years is another factor that will take time to become solidified.  The recent volatility, price expanse, and spreads between starting feeder and finished fat may not allow for some to continue within vertical integration while others will grow.  This year will mark another accomplished agenda.  The first was to increase beef production from what was available.  The next is the long sought after lines of vertical integration that will help retail outlets avoid some of the price volatility we deal with daily. These appear to have strengthened significantly as some producers are seemingly having to participate, while others are wanting to participate. My opinion alone is that traders are not filling the tiger trap with dirt, but water.  So, were those treading water to weaken, I would expect further downside movement.   

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​​Feeder Cattle:​

After two days and 5 minutes today down, traders stepped in to converge basis.  Like above, I do not believe they are pitching dirt back into the hole.  I think they are filling it up with water and treading is about the best we can hope for.  After the first 5 minutes of trading, traders covered shorts or bought the positive basis.  At the close, traders have pushed most contract months higher to produce a .618% retracement of the past two days and 5 minutes.  Humans cannot think this fast.  Cattlemen don't have time to think this fast about the market.  I cannot urge enough to spend the time to work out the specifics of your needs and then convey them into the markets before the rain starts.  Participation of options, in times of excessive volatility, will increase the premium you pay.  While we have never been able to pick a top or bottom, and at times our timing of execution not exact, but when we do make recommendations, it is attempted to be in a time frame of lower volatility and rising prices.  Government spending is over with and I believe, with no reservation, that it was 100% government spending that gave consumers money that never had money, creating increased beef demand and dependence, and the dollars spent on increasing processing capacity creating more hardships on the industry than could have ever relieved. 

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​​Class III Milk:​​

​Milk was lower again today.  There is no doubt I am obviously wrong on milk rallying.  Seemingly having followed multiple other markets lower, I am unsure as to blame this solely on milk. Nonetheless, I have been wrong, but do not necessarily think that selling it short here, or exiting long positions is correct either.  For the moment, I am going to hold on another day to see if a knee jerk reaction takes place in multiple commodities. 

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Corn:  

I recommend buying the July at the money corn calls and buying the December $5.00, $4.80, or any bull call spread of a dollar with a less than $.25 premium.  This is a sales solicitation.  I thought Monday was the bottom.  I think today is now the bottom.  ​​​​​

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​​Energy:​​​​​​

Energy was off sharply early in the session, but has since turned positive in gasoline and diesel fuel as I write this.  I expect energy to remain soft, but not sure if a collapse is in store. 

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Bonds:​​

​Bonds were higher, and turned lower after making a new high in this rally.  While probably not a big move down in retail rates, but if one were going to take advantage of the recent rally in bonds, it would be to adjust lines of credit.  ​​​​​​

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​​This is intended to be or is in the nature of a solicitation. An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of the margin deposits.  You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources and other relevant circumstances. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.