Shootin' the Bull about a plausible answer to the sell off

“Shootin’ The Bull”

by Christopher B Swift

​11/6/2025

Live Cattle:

The lack of information available to explain the significance of downward price pressure leads me to lean towards a comment read earlier this morning, stating that potentially a large cattle producer was forced to hedge.  Of all the reasons for the market to trade lower, this is one that is the most believable.  If so, then two things may be drawn from this.  One would be that with the hedges now made, there may not be as much need for forced selling, as well as, there probably won't be as many to want to push feeder cattle prices up to levels for which the same thing could happen again. The large price spreads between feeders and fats is narrowing quickly.  This is anticipated to remain so for awhile as it is anticipated the border being reopened to cattle is more likely sooner than the reversal of tariffs or reopening of the government.  Hence, beef and fat cattle still in more demand than feeders, as even with the border open, it will take a few months to square up the cattle for slaughter.  I recommend to remain net short, and if attempting to capture open position in a derivative, only use the call option to reduce risk exposure to the premium paid for the option.  This is a sales solicitation.     ​

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Feeder Cattle:

Cow/calf producers are believed to have done very well in marketing inventory at levels never achieved before.  Again, this is believed an anomaly, so if going to return to some form of normalcy, one will need to find a way to replace the current wide profit margins, and look to maybe fill the void with more inventory.  Hence, it appears that the price break lower may be of more benefit to cow/calf producers wanting to expand and the lower price giving them a reason to hold back.  This is expected to go throughout the production cycles as the wide profit margins shrink back to normal, and to make up the difference between the two, more inventory will need to be managed. I recommend maintaining a net short position with any attempts to capture open position equity in a short derivative, use only call options so as to reduce the risk exposure to only the premium of the call option.  It may not do much more than allow you to sleep while so much price expanse is being displayed.  Between the border opening or not, and what position cattle feeders may be in, time is believed needed to sort out a great deal of what has transpired over the past 7 weeks. Having a net short position, with no upside barrier, is believed a way to let time go, allowing you to have your cake and eat it to, at least for a little while.  

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​Corn:

All ended lower today.  Bulls repelled from the highs in beans and corn today.  With significant consolidation over the past few  days, I expect another attempt at the high, and maybe even enough to push to a new level.  Upside target for July corn is $5.00.  ​

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Energy:​

Diesel fuel continues to lead the way and I think it possible this has to do with the Ukraine bombing Russian oil refineries.  It would make sense with crude the weak link and the products the high flyers.  With reduced refining capacity, the crude builds in supplies and the products starved.  As the Russian war machine needs diesel, it maybe that Russia is the culprit behind the stubborn rise in diesel fuel prices.  And just so you'll know, today's high is just a little more than $.02 from the end of June high when the bombs dropped on Iran, but crude is over $12.00 off the same time frame high.  In my opinion, were the refineries to jump start again, crude would plummet.  What does the President want more than cheaper beef?  Cheaper gasoline.   

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Bonds:

​Bonds were higher today as it appears the US will have to just buy more of its own debt to continue to fund the government.  Weaker consumer sentiment, and firming stagflation, continues to lead me towards expectations of more recessionary factors than anything else. I am no longer bullish bonds, but not bearish either.  

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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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