“Shootin’ The Bull”
End of Day Market Recap
by Christopher B. Swift
4/7/2025
Live Cattle:
Cattle feeders can't catch a break. Feeders are lower, but not by as much as fats. Corn was higher and diesel fuel no cheaper. Consumers are now front and center as to whether they continue to show great resilience towards the inflation, or beef suffers due to. As the inflation consumers are feeling is not commodity related in general, falling prices won't have much impact on spurring them to increase expenditures on. With only beef/cattle, coffee and gold the commodity inflation impact of the consumer, and coffee not consumed enough per day to make a difference in disposable income when made at home, and gold a non-perishable item and not consumed, it leaves beef/cattle at the tip top of the consumers inflation factor. Whether it does or does not, cattle feeders own the most expensive inventory in history, with extreme discounts in price for future marketing, and nothing seemingly being done about it. Packers slashed slaughter pace again last week. With previous expectations of plenty of cattle on feed to be marketed in April, further slaughter cuts, and further aspects of contraction in consumer spending, feed yards and cattle feeders may finally become beholding to the packer again. In my opinion only, since the sun has not shown on the other dogs a** much lately, one may want to expect them to want to relish in the sun for as long as possible.
Commodity funds, speculators, and participants on every front no longer finds the live cattle market as interesting as it did previously. The loss of over 13,000 contracts suggests that when the music stops, funds don't go looking for a chair, they leave the party. The positive basis spread is deep. Expectations are for cash to soften to levels of futures. Downside target for fats is the low made on March 4 per respective contract month. If made, note the head & shoulders formation with potentially the right neckline being made now. This suggests the potential for a right shoulder that could give producers another look at the higher price before another round of selling would be anticipated.
Feeder Cattle:
Feeder cattle futures are not expected to soar back up to converge the basis spread. I expect cattle feeders to show great reserve in bidding for inventory this week that could potentially push the index $10.00 to $15.00 lower before weeks end. Futures are expected to trade violently in a wide price range as cattlemen wade through how they will contend with ownership of the most expensive inventory in history, a consumer believed overwhelmed with inflation factors for which are not commodity related, and the potential for a spike higher in input costs. Worse, were consumers to actually balk at beef prices, we could see a 10% to 20% correction in beef, leading to a $34.00 to $68.00 decline in.
Corn:
Corn was higher today. I don't know why, but it is now trading back over $4.70, a new high from the March 28 low, and technical indicators starting to turn higher. I recommend cattle feeders own the at the money July calls and $.20 out of the money December calls. This is a sales solicitation.
Energy/Bonds:
Energy ended the day softer, but not before having been plus on the day for a while. I continue to believe that while prices are lower, it would be of benefit to secure some fuel needs for future purposes. As the options in the products can be illiquid, the crude oil options are very liquid. While some percentage difference in gains or losses may be seen, they would be anticipated to be minor in comparison to a move higher or lower. Long way around the barn to suggest using crude oil options to secure future fuel needs.
Bonds made a new high in the opening session Sunday evening. A full 5 point range has been traded today with a 2 point higher trade last night and 3 point lower trade through the day session. As I write this, bonds are still down over 2 points. This has been a move for which appears traders climbed a hill and fell off a cliff. I recommend buying bonds or call options on bonds. This is a sales solicitation. If you don't want to trade bonds, then keep very close track and were they to breach the 127'00 area, I would consider adjusting lines of credit. The current administration has created a significant amount of turmoil that won't be settled quickly. It is difficult to reverse such a poor course the United States was on, so buckle up and slow down, this is far from over with yet.
“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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