Shootin' the Bull about being blown out of proportion

“Shootin’ The Bull”

by Christopher B Swift

​11/17/2025

Live Cattle:

Friday's announcement on tariff reductions towards Brazil was seemingly blown out of proportion by this morning's opening.  I could not understand why such a lower opening on a 10% reduction of tariffs on beef from Brazil.  The 10% reduction doesn't appear to even move the needle towards increasing margins to secondary meat processors.   Those processors make every kind and form of patty that is sold for grocer retail counters to every food service there is. Hence with no increase of cuts, or cattle for cuts, this morning's lower trade appeared as an opportunity for futures to narrow basis.  That is what is anticipated over the next few weeks is simply converging basis.  While there is not a great deal of width in the fats, it could lead to the possibility of a negative basis a some point in time. That may be a little bit of a stretch, but could.  Although fledgling, a contracting price range has begun.  The $228.00 to $215.00 range of February leaves a lot of room for error.  For the time being, I prefer to be flat with a net short position.   Being flat suggests the ownership of a limited risk derivative that may or may not be capturing open position equity from a different derivative. The net short comes from only being long a fixed risk derivative in that were prices to continue lower, the call option would decay at a slower rate, and short derivative increase at a greater rate.  At this point, I think more time needs to transpire before we see the next move of any significance.  

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Feeder Cattle:

​Backgrounders are the ones with the work to do.  The exceptionally wide basis will have to be contended with for months to come.  With a belief that many are sitting on significant unrealized profits and the low from contract high just made on Friday, I think there is a lot of wiggle room for producers to move in the manner they feel best for their operation.  Regardless of how you wish to proceed from here, I think that having captured as much of the open position equity as possible, while still maintaining a net short position, will allow for the time to go by with as little discomfort in price fluctuation as possible. 

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A couple more things on the front burner for cattle feeders to contend with are, diesel fuel continues to move higher on a belief of further Russian/Ukraine destruction of refining capacity, with corn and beans having reversed a negatively construed WASDE report from Friday. Beans have made a new high from contract low.  Corn and wheat were not left behind, and on today's Mid-Day Cattle Comment, I recommended buying Chicago or Kansas City wheat with a sell stop to exit only at $5.56 Chicago and $5.48 KC.  This is a sales solicitation. 

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​Corn:

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Energy:​

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Bonds:

​Bonds are believed building a head and shoulders pattern.  Recent comments of the President's desire to stimulate sound much more inflationary than stagflation or recession.  Therefore, I think it possible that bonds could move lower sharply before years end.  A problem with the US is that no one wants to buy our debt, leaving the US to sell itself bonds and notes to keep the government running.  Robbing Peter to pay Paul and Paul has holes in all his pockets. ​

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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.