Shootin' the Bull about what to do!

“Shootin’ The Bull”

by Christopher B Swift

​12/31/2025

Happy New Year!  On behalf of Chris Winward and Shawn Gammon, I would like to thank all of our clients, subscribers, readers, and agitators for their input to help form opinions to help make the most informed decisions. 

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Live Cattle:

When not knowing what to do, I have heard as many times to "do something", as I have "don't do anything".  Both can be very applicable depending upon the situation.  In this case, where we have exceptionally good prices, but not much foresight as to whether they will continue to move higher or lower, I lean towards doing something over nothing.  My opinion off the cuff is that cattlemen have been aggressively obtaining inventory in great expectation that another cattleman will pay even more for them down the road. Whether prices move higher or lower, the risks being assumed are significant with seemingly only one way to return inputs, the price has to keep going up.  Stating the obvious has no impact on price direction, it simply points out what must take place.  ​

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Feeder Cattle:

My opinion off the cuff is that cattlemen have been aggressively obtaining inventory in great expectation that another cattleman will pay even more for them down the road.  I recommend maintaining all previously recommended hedge positions to sustain the price you have already achieved.  When acquiring new inventory, you may wish to reduce exposure to the upside with an at the money put option.  This will produce the lowest minimal sale floor, but allow for any opportunities that may materialize for a higher marketing price.  When attempting to capture the most premium, while producing the highest minimal sale floor, few actions will be more advantageous than the fence options spread.   Simply due to the ability to allow for convergence of basis at higher price levels.  Although a futures contract will produce the highest sale floor at that time, it has the potential to expose you to the current positive basis spread.  Remember, that with a positive basis, if the index doesn't move, then futures will rise to the level of cash and you get no more cash benefit because it didn't move and futures moved higher, against you, to converge.  If prices move lower, the cash market could potentially fall to the level of the futures and then move no further and you will have made or lost nothing on the futures contract, but lost the premium the cash once held to the futures.  Basis is believed an important aspect when considering where and when to market or procure inventory.  If you don't have a good understanding of, I recommend you take the time to educate yourself on basis, how it works, why it works, and to what advantage or disadvantage it may be to your operation.  With 2025 a record, and many believing 2026 will top or exceed it, there are believed going to be multiple opportunities to procure at lower prices and maybe market at higher prices through the year.   ​

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​Corn:

​Corn was able to be plus on the day, but not by much and only a few contracts.  Beans have resumed their downtrend as the Elephant in the room is becoming more noticeable.  Increase for biofuels is not expected to make much headway in 2026 due to fossil fuel pushback and automotive factories having to revamp engines to run on higher ethanol limits or biodiesel.  World wheat crops appear in good shape.  ​

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Energy:​

​Energy is lower.  The down trend is believed resuming.  Even with expectations of handing out money at the first of the year, I am unsure it would spark a commodity rise.  Considering who would be eligible, and the tough conditions the lower tier has been dealing with, leads me to believe any money given out will go to needs and probably not hamburgers. ​

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Bonds:

​Bonds were lower as there are some expectations of a 1st quarter consumer payout.  Hence, print or give money away, and people are expected to spend it. Although the rate of inflation has slowed, it's still simmering above low with more desires to keep it turned up than let it get cold.  ​

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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.