Shootin' the Bull about declining price on a slope of hope

“Shootin’ The Bull”

by Christopher B Swift

​12/05/2025

Live Cattle:

In my opinion, optimism has roared back in rare fashion.  Unfortunately, only cattlemen seem to share this optimism.  Packers, grocers, restaurants, and consumers are not necessarily on the same page as cattle producers in that they have been the ones experiencing detriment by the higher cattle prices.  In my attempt to decipher the next most probable move, I asked myself, if a bull market climbs a wall of worry, what does a bear market do?  It slides down a slope of hope.  The significant increase of optimism, in the face of immense projected negative returns, suggests producers are in great hope of prices returning to the previous, if not higher prices than in this year.  There is no doubt in my mind that prices could do this.  However, the fundamentals of "there just aren't any more cattle" may not hold as much weight as it did in '25.  That is because there is too much production and processing capacity for the number of animals available.  Processing capacity has already begun to shrink towards the end of this year.  I anticipate some smaller ones to be having trouble as well.  If the border remains closed, then I would expect production to begin shrinking.  If the border is reopened, then more cattle will be available and the only reason prices are so high now is that there are fewer cattle.  So, whether anticipated or not, the reopening of the border would bring in more inventory and that would be anticipated to make cattle prices weaker.  Towards the end of the week, I read a story about Wendy's and the troubles they have endured, as well as foresee.  McDonalds, Kroger's, and others have mentioned through the year the shifting of consumer demand and changes in willingness to pay.  So, with great optimism for cattlemen, but not so much for beef, I anticipate a decline in cattle prices on a slope of hope.

I am an avid follower of the Elliott Wave and believe it has some forecasting abilities. My interpretation of a wave pattern on feeder cattle suggests that the first move down is from contract high to the 11/6 low per respective contract month.  For example, I will use the January contract.  The close only chart takes out the noise of the day's trading ranges and only subjects one to the close of the day.  I can count 5 waves down that terminates on 11/6.  This count is now labeled major wave A.  From there, the market rallied, and then sold off again in what is believed an irregular major wave B.  What makes this irregular is the exceeding of the low of the initial move down of major wave A.  The irregular major wave pattern of the B, is believed to have set up the current C wave rally of the major B.  The C wave rally of the major B wave should unfold into 5 lesser waves and at Friday's high, I believe we are within spitting distance of.  If correct, the fundamentals and technical chart pattern leads me to anticipate a major C wave decline to a new low under the 11/6 per respective contract month.  If wrong, prices will move higher and how you manage the inherent risk of livestock production determines the outcome.  This last sentence made me think hard about producers and how they may want to manage risk after this year's price movements.  That could become a major issue if producers forego risk protection, exposing themselves to even more risk.  I believe that if you factor in this variable, with the others of the equation, it could make for a slippery slope.  Charts are available on the Shootin' the Bull site. 

The President has had some good success in accomplishing goals he has set.  However, a thorn in his side may be China.  Soybeans rallied just over a dollar on expectations of large Chinese demand.  As this has faded, and been moved down the road, I anticipate all of the gains, and maybe a few more cents, to be wiped out in beans.  Corn is not expected to fair very well either.  Basis is terrible and the cost of carry barely covering half of storage costs.  Throw on top that, US corn and soybeans are sharply higher than in the rest of the world, and it leads me to anticipate a sharp decline in corn and soybean prices.  Were corn to soften further, it would be expected for cattlemen to try to further grow their way out of projected losses.  Energy has been the most perplexing of markets to figure out, and since the market itself has not figured it out, I don't fault myself too much.  Crude oil has stagnated into a well-defined trading range.  Diesel fuel continues to be exceptionally volatile with wide price expanse.  The spreads between crude and the products lead me to believe this is a refining issue and not shortages of oil.  Hence, were any peace agreements made between Russia and Ukraine, I would anticipate oil prices to plummet.  As they continue, then spikes in diesel fuel will be anticipated.  Bonds sold off and began making new lows from contract high.  Japan is a huge drag on US bonds as they are the largest holder of US debt outside the US.  The US remains in a very inflationary pattern with further evidence of a two-tier economy unfolding and the lower tier not doing so well. 

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