Shootin' the Bull about December and February fats

“Shootin’ The Bull”TM

by Christopher B Swift

7/13/2026

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Live Cattle:​

The focus is on the December and February fat cattle.  Currently, they will be the most expensive inventory ever placed to date. Basis is horrible.  The price at contract high of both months on 5/1, and recovery high of 6/22, fell short of converging basis, but was noted at the time, could be the highest price to be achieved.  So far, it is.  There has been an exodus of open interest.  The fewer traders, and no longer bull market, is expected to increase volatility, producing more price action similar to today.  Since there is not expected to be much change in cattle on feed or numbers in total, beef is believed the issue and cattlemen have no control over that. 

To stop price erosion, buy 2 at the money put options to create a 100% Delta at the onset.  You are not locking in a small loss, you are attempting to avoid an even larger one as downside projected targets for December and February live cattle are new contract lows. 

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​​​​​Feeder Cattle: ​

​Any portion of the $23.20 decline in the August contract, from the end of June high to today, would be better than nothing.  With still lots of inventory to market, do you watch price continue to erode, do something about it and wish you hadn't, or do something about it and potentially be rewarded for minimizing your exposure to downside price action? 

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To stop price erosion, buy 2 at the money put options to create a 100% Delta at the onset.  You are not locking in a small loss, you are attempting to avoid an even larger one as downside projected targets for fall and winter feeder cattle are filling the gaps created from the 11/25 low.  If you were not happy being hedged, managing risk, or looking back in hindsight of what could have been, you will absolutely not like seeing what should have been done in hindsight in a bear market. 

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For those that were proactive, a trade down to $336.00 August is an area of interest to either roll down puts, sell put options $10.00 to $20.00 lower, or simply cover the position if cattle have already been marketed. Downside index target is $330.00. 

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​​​​Corn:

​A great start to Sunday evening fizzled by the close. Higher appears the path of least resistance, but there remains a lot of resistance to chew through.  There is a great wall of worry building in grain and oilseed production this year.  With today's new contract high in the July '27 contract, it appears the crop may not be quite as good, or demand a little better than previously thought.  Wheat continues to baffle, but along with beans, appear to be resuming upward trends.  Corn was able to close higher. Along with a $.25 hike in diesel fuel prices today, producers are not getting any breaks. Traders breached the 50% retracement level of corn.  I don't foresee this exciting the farmer much, so I don't expect sales at this level.  If anything, with beans at new contract highs and this years wheat crop a disaster, I don't want to be short corn. 

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Energy:​

​Off to the races. Diesel fuel closed within $.10 of its contract high close.  There is still another dollar higher to go to get to the March high.  I believe it has a good shot at exceeding this.  In all of my history lessons and books read about wars and battles, one bullet, bomb, or missile hitting the right, or wrong target can shift the entire tide.  I do not recommend you be subdued by the overwhelming might of the US, and consider what a long, drawn out conflict will look like, 6,000 miles away, over a strategic waterway. Then, throw in the antiquated, and much reduced refining capacity to produce diesel and gasoline, and those March highs do not look that far away.  

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Bonds:

​Bonds were lower with some talk about a rate hike in July.  The next FOMC meeting is July 28 & 29.  The yield curve continues to produce more liquidity on the front end and there is no foreseen let up in government spending.  Equities are starting to look weak and when considering the stellar, and somewhat abnormal gains, buying an at the money put in the S&P will help to reduce downside exposure.  ​

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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.