Shootin' the Bull about the Border

“Shootin’ The Bull”TM

by Christopher B Swift

7/29/2026

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Live Cattle:​

Traders provided producers with a little reprieve from the selling and a tad better environment for which to price options and options strategies.  Prior to the opening, I made recommendations on how and what to do.  The same commentators that suggested the loss of the Mexican inventory wouldn't make that big of an impact, are seemingly the same ones now suggesting the return of won't have much of an impact. I disagree as the reason cattle went up is because there were fewer of them.  There will be more now going forward, even if a trickle at first.  ​

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My analysis suggests downside targets to be contract low, if not more.  I recommend you take every step to benefit from, or keep from being detrimented by.  

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​​​​​Feeder Cattle: ​

Backgrounders continue to assume significant risk as spreads between calves/stockers and feeders remain exceptionally wide, and severe discounts to market into. Like the fats, contract low is the target and that remains $30.00 plus from here.  A bear put window is believed a way to capture more of the $30.00 break, were it to materialize, than just owning the at the money.  If greater than a $30.00 move lower, one would become flat and have to make another trade to become short again. 

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I think the dismissal of the border reopening is wrong.  No doubt, there may never be the previous numbers to come across, but every one that does, is one more we didn't have. As expansion takes place, every heifer held back could be replaced with a Mexican steer or heifer to go on feed.  Then, if expansion were to take place, Katie bar the door. 

In 2014 the recognition of extensive expansion was realized.  The price broke $38.00 in 3 months.  However, the cattle were not there yet, so traders spent the next 3 months bidding prices higher.  By then, it was obvious the number of cattle to be birthed in the coming years, and prices fell $111.33 48% over the course of 16 months.  A 48% decline from today's close would put the index at $180.90.  Note that currently, this is only the first move down. This is the recognition of congestion at the center of the plate and more cattle to work with. Risking an option premium of less than 5% to potentially protect the other 43% is what you are attempting to accomplish. 

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​​​​Corn:

Grains traders were after the bulls today as beans and corn sold off sharply, but wheat mostly held its own.  The volatility in the corn market is welcomed to help cattle feeders secure their feed needs at the lower levels.  I'm still friendly, but it isn't helping prices at all. 

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Energy:​

​Diesel fuel soared higher today.  Crude led the way and gasoline brought up the rear.  Refining capacity is above 97%, so they are cranking out the products.  Energy is anticipated to continue to move higher, especially diesel fuel. 

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Bonds:

​Bonds were lower as the Fed kept rates unchanged.  The new contract lows in the 10 year notes though is about the same as a rate hike as a number of debt issuers use this instrument to mark their rates to. ​​​

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Large price expansion is taking place in a number of markets.  Options are a way to participate, while limiting risks to participate.  Due to the wide price expanse, opportunities are believed available.  

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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.

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