Shootin' the Bull about skepticism

“Shootin’ The Bull”

by Christopher B Swift

​12/17/2025

Live Cattle:

Futures traders turned skeptical by the close on packers paying a higher price this week.  They still may, but not today.  Futures traders have done an excellent job of keeping basis even.  This is beneficial towards the ability to market into the future at the same price as today.  The problem remains that prices are not at levels to return input costs.  Coupled with this year's experience of hedging, leads me to believe that fewer cattle are hedged into the February and April contract months.  At the moment, these cattle will be the highest production cost inventory ever produced. I continue to believe that cattlemen are over extending themselves in prices paid for inventory, that starts in a severe negative margin, at a time when the packer is contracting in capacity, restaurants and grocers having commented on shifts in consumer demand, and the consumer themselves believed facing more inflationary factors in an economic time frame of going into a recession. I'm attempting to not view my analysis as right or wrong, but simply an attempt to price inventory at levels that may or may not be of great advantage in the near future. 

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Feeder Cattle:

​Backgrounders are at a slight disadvantage to cattle feeders at the moment with basis positive, and widening today with futures lower.  The index is expected to be less than a dollar higher today.  Increased volume the past two weeks is believed producers attempting to market into the current aggressive buying. Basis is very clear on this, today is the highest price.  All of this is expected to dry up after Friday as we move into a two week time frame of very abbreviated trading and scattered production.

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​Corn:

Corn was plus on the day, but the pressure on the wheat and beans remains.  While I do anticipate a correction in beans, I anticipate still lower to go.  Barring a massive drought, that actually curtails supplies, or increase in domestic biofuels, corn and beans don't seem to have a great deal of demand that would begin to decrease the glut. Recall, the stimulation that is taking place should be bullish towards commodities, but so far it is not. 

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Energy:​

Energy was a little higher, but not by much.  The down trend is believed well intact.  The draw on crude stocks is believed the realignment of refining.  It got wacked out of line and caused the products to soar and not as much need for the crude.  As refining has returned, more demand for the crude had produced the draw.  I look for crude and the products to be more in line with one another as they carve out a bear market in energy. Recall, the rally was mostly diesel fuel and then gasoline, but neither due to demand, but a refining issue that appears to be resolved. 

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Bonds:

Bonds are soft.  Bonds have consolidated in about a point range.  I anticipate bonds to trade lower as inflation will be expected due to the stimulation being produced by this administration.  The yield curve is expected to continue to loosen, as it has been since the first of November.  The past couple of days have produced a small correction of the spread.  In this particular case, I anticipate both long and short term debt derivatives to decline in price, but the long term will decline more than the short term, producing the intended affect of loosening the yield curve.  In a spread, it does not matter whether prices move higher or lower, just that one market, or contract month, goes higher or lower by more than the other market, or contract month.​

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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.