Shootin' the Bull about charging out of the gates

“Shootin’ The Bull”

by Christopher B Swift

1/2/2026

Live Cattle:

In my opinion, cattlemen did what was expected, they started the new year aggressively acquiring inventory.  Futures traders covered shorts and cattle production in all weight categories are believed going to surround themselves with cattle in hopes that in the future, someone will pay even more for them than they did. As reflected by the spreads between starting production weights and ending, there appears little profit margin for some categories and deep negative margins on others. While entering into negative margins is nothing new; the spread between cattle and box beef has widened so now, that it seemingly makes it that one side almost has to make some type of price adjustment.  Whether that is cattle coming lower or boxes higher, is yet to be seen. Observation of other markets makes the higher cattle/beef price seem as if they are fighting the wind.  Grains and oilseeds are in, and have been in, a long-term bear market.   Meat proteins have been in a short-term bear market since reaching historical peaks this summer.  Energy is in a bear market with expectations of lower, and other foods and fibers are lower as well.  The price trend lower of consumer necessity commodities doesn't reflect a high spending priority on these necessities.  What has priority? Gold and silver.  Those markets are the ones that people tend to flock to under times of economic duress or social unrest and they are moving. These factors seem to be conflicting towards expectations of consumers being able to increase willingness to spend on, or consume more beef.  Hence the anticipated divide between cattlemen bidding higher for incoming inventory and all other parties that participate in the beef market willing to pay a higher price.  

Production capacity began contracting in 2025.  I anticipate more of going forward.  The next shoe to drop is expected to be production capacity.  As cattlemen today surround themselves with thin or negative margins, it may become more difficult in the future to find those as willing to assume these margins as you were.  Hence, the rationing of production begins to take place.  I don't anticipate there ever to be an expansion birth rate to exceed the previous.  Therefore, there are not expected to ever be more animals than at a previous high-water mark.  The beef/dairy cross will continue to grow as efficiencies are well noted and the vertically integrated supply chain strong.  Mexico remains in the background, but with over 14 months having gone by since the closure, one has to believe the Mexicans have found a way to produce and process inventory in their own home country.  So, even if opened, the US may not be privy to as many as previously.  This suggests that feed yards in the south will remain at lower production levels. Government actions are weighted heavily in my analysis.  For the moment, spurring core inflation is seemingly more key than lowering it, as found by reinventing quantitative easing.  However, that is not the case with commodity inflation.  The actions taken by the same government are tending to be negative towards commodities, as seen by subsidized payments to farmers.  On the other hand, gold and silver are roaring higher, as they tend to be commodities garnered in times of economic strife or civil unrest.  As America loses more of its identity, having watched a muslim sworn in as mayor of New York City, on a book that wasn't the Bible, by a hypocrite, and the inexplicable fraud of the US taxpayer, it is easy to see why bonds are lower, the US dollar is lower and gold/silver sharply higher.  I think it worth considering the above before over extending oneself on cattle.  Then, consider that if you do go through with it, do not neglect risk management, as you will be assuming a tremendous amount of it. 

 “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.​