Shootin' the Bull about a wrap for the week

“Shootin’ The Bull”TM

by Christopher B Swift

7/10/2026

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Live Cattle:​

In my opinion, current optimism met headlong with future pessimism this week as cash remains stout, even though lower, and futures down sharply. It's the beef market more than the cattle market.  As noted for weeks now, the center of the plate has congested and it is working its way up the supply chain. Beef production continues to be supported by increased imports and decreased exports. Box beef price is not believed an indicator of demand, but a function of slaughter rate. Having lost a portion of the drop value, packer margins are believed to have worsened this week.  Going forward, cattle marketed will have been placed at a higher price, all the way to the end of June.  With cash softening, the anticipated losses could be staggering.  The only way I know of to stop price erosion, and keep the basis open, would be to buy 2 at the money put options for every load.  The reason for two is to obtain a 100% Delta at the onset.  Recall, an at the money option trades at an approximate 50% Delta to the underlying futures. While seemingly a little capital intensive, it's a rain drop in a 50-gallon barrel in comparison to the risk of capital currently being assumed.  Next week is expected to be filled with volatility, suggesting opportunities to market at a higher price may present itself. Through my career, it has been noted that a small loss, or the first loss, is the best one. However bullish you may be, don't let the first loss be a big one.     

The video sale runs have started.  So far, there have been a few higher prices, but not enough to move the index to a new high.  This week, the CME feeder cattle index will close lower from the historic high.  When viewing the weekly index or continuation feeder cattle charts, visualize an amusement park map that designates, "you are here."  Note that where you are is a fraction off historical high. Cattle feeders are believed showing reserve in bidding for new inventory with a few on the outside that may "have" to pay whatever necessary to meet contractual agreements.  Downside target for the index is $330.00, the 11/25 low made last year. Futures have a good head start on making it to that level, suggesting to anticipate tremendous volatility as convergence will take place; we just don't know at what price level. 

Input costs are not burdensome at the moment, but could be very quickly.  This week alone, diesel fuel prices were up 11%, corn up 4%, and interest rates a tad higher. Renewed military actions in the middle-east pushed energy prices sharply higher.  With stocks of diesel fuel very low, and no increase of refining capacity, I don't expect diesel fuel prices to move lower.  Corn, beans, and wheat all put on a stellar performance this week.  Beans and wheat are believed resuming up trends with corn trying its best to catch up.  I had recommended buying wheat earlier this week and continue to anticipate a higher price.  Producers that heeded recommendations to fix their corn price with call options, at levels they no longer wish to pay, got a good head start on those positions this week.   Beans are very interesting as they retraced the least when topped and are the closest to this year's high. With beans and corn a component of energy, support is believed more likely than resistance.