"Shootin' the Bull" about increasing assumption of risk

“Shootin’ The Bull”

by Christopher B Swift

7/09/2026

Live Cattle:​

​Price erosion continues, with basis remaining wide.  Producers remain bullish, as displayed by prices still being paid for inventory.  Futures traders are not believed in any hurry to converge basis by pushing futures higher.  Boxes are lower and the drop value is declining as well. Beef imports continue to keep beef volume from slipping further, and the beef/dairy cross is expected to grow by another percent, if not more, by this time next year.  ​​

​

The industry has gone to great lengths in rationing to keep beef affordable to the consumer.  Beef/dairy cross is by far the most important change domestically that has transpired.  Imports are second, and will continue to grow as other countries have ample beef to sell. Producers continue to be bullish, due to low supplies of cattle, while all other entities process, market, prepare, or consume beef.  There may not be as many cattle, but beef production, whether domestic or imported has remained elevated enough to have sufficed the consumers appetite.  Current retail price, and menu prices, are expected to have curtailed consumer demand.  Were box beef prices to rise, it would be anticipated from further cuts in slaughter, than an increase in consumer demand. The only way I know of to stop erosion of price is to own 2 at the money put options.  This will produce a 100% Delta at the onset and leave the top side open, were basis to be converged with futures moving higher.  

​​​​​Feeder Cattle: ​

Basis is wide, but can get a lot wider before having to narrow.  Then, when narrowing occurs, could as easily be by cash moving lower than futures higher, or a combination of the two. Producers are anticipated to thin themselves further as a huge top is forming.  Recall, bottoms tend to be long and drawn out, as it takes time to chew through heavy supplies.  Tops tend to be sharp as the higher price encourages production, or incentivizes alternatives. Since it takes a longer time frame to produce cattle, the top appears to be more rounding than a spike, and has yet to encourage any expansion, but has alternatives.  Cow/calf producers may not want to expand, or maybe can't expand, but to keep market share, they have to expand. 

​

Like the fats, the only way I know of to stop price erosion is to own 2 at the money put options to create a 100% Delta at the onset.  This leaves the top open to converge and floors the minimum sale price to; strike price minus premium.  

​

​​​​Corn:

Corn and beans were lower with wheat higher.  I recommended today on the mid day cattle comment to own KC or Chicago wheat with a sell stop $.02 under today's low.  Beans were in an uptrend before falling off a cliff.  With this weeks gains, it appears traders are starting to climb back from which they fell.  Were a new high to be made, it would suggest a wave 1 and 2 are complete with a wave 3 higher.  I anticipate wheat to trade higher, beans to trade higher and corn to follow behind.   

​

Energy:​

Mixed through the day, but mostly lower as I write this.  I believe diesel fuel is resuming its up trend with new contract highs anticipated.  Although a little more difficult to recommend topping off farm tanks and booking fall harvest fuel, than last week, current price for August is still $1.29 lower than the March high. 

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​

Bonds:

​Bonds set a new low in this decline before turning plus on the day.  It's not a very impressive recovery and I've already seen the near 200 billion slated in bills and notes for next week. Government spending, and manipulation of the yield curve, is anticipated to keep inflation cooking.  

​​​​​

​​​​​​​​​​ “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.

​