Shootin' the Bull about incentive

“Shootin’ The Bull”

by Christopher B Swift

​12/18/2025

Live Cattle:

Lower boxes proved no incentive to bid higher for inventory.  Trade this week started at just under steady to two dollars lower.  The next two weeks of abbreviated trading is expected to produce some volatility, but most likely not a great deal of price expanse without some news.  I see further division between what cattlemen pay for cattle and all others do for cattle or beef.  With vertical integration well cemented in some areas, the consistency of placements won't slow any for these producers.  Those outside of may find it more difficult to obtain cattle, or have to buy them in sale barns, paying premium.  With cuts in processing, no more cattle to contend with than last year, what will the production side of the industry do, or have to do, in order to compete in this environment?   

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Feeder Cattle:

Basis slipped a little wider today.  Backgrounders are the ones believed entering into significant negative margins now with some of the prices seen for lighter weights and futures discounted out to this time next year. With an opinion that normality should begin to return going into '26, it leads me to anticipate the return of carry in the back months.  This suggests that maybe we begin to see the summer and fall months begin to trade higher, or not as low as the spring months.  ​

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I recommend selling March feeder cattle and buying August feeder cattle on a spread. This is a sales solicitation.  The spread closed at approximately $4.275 March over August.  My expectation is for March and August to trade to even, if not March under August at some point.  This spread can be varied with different contract months, but the idea is for normality to return and that suggests carry in the back months.  

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​Corn:

Corn and wheat were able to trade higher, but even with a flash sale of beans, they continued lower.  The hype, and then failure of the trade deal with China, and too short of a bridge payment, is believed to have caused mass farmer selling and long futures traders exiting longs. Too much supply, too much reliance upon exports, and not nearly enough domestic usages.  

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Energy:​

Crude and gasoline have fought to try to stay positive on the day.  Diesel fuel has been down for most of it.  I anticipate energy to be in a down trend with further price erosion anticipated.  

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Bonds:

Bonds are trying to stay plus on the day.  Up a little less than half a point as I write this, the stagnation in price continues for the moment.  Today's CPI coming in lower is a little eerie after having made the comment earlier this week about the economy going into a recession.  Although inflation was 2.7% higher, the rate of inflation continues to decline, and if goes negative, recession is upon us.  There is no commodity inflation.  Of the 2.7%, only 1/10th of a percent was commodity inflation.  All commodities have seen a significant reduction in price.  Cattle, at the moment, are attempting to counter this by trading higher, when no other agricultural commodities are.  

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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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