Shootin' the Bull about catching up on the week

“Shootin’ The Bull”

by Christopher B Swift

1/23/2026

Live Cattle:

I'm looking forward to CattleCon being in Nashville this year, seeing friends, and meeting new ones.  Although I won't have a booth there, I will be present on Tuesday, February 3rd for the day.  If you have a moment during the day, send me a text as to where you are in the show and I'll find you. If you would like to set up a time now, please do so and we will find a place to talk.  My cell phone number is 615-828-5891. 

In my opinion, not a great deal changed over the past week.  I think the Mexican border is no longer an issue.  Whether the cattle are north or south of the border, the same number continues to exist. I think enough time has elapsed that encouraged an increase in production and processing that suggests if the border remains closed, Mexico's domestic production will rise and leave less room for imports, or they import the beef into the US.  If the border opens, there will just be fewer cattle, and producers that were privy to the production of this inventory will find some elsewhere, or contract in production in the same amount as the Mexican inventory made up. A consensus among those I spoke with last weekend was caution.  Few reasons were given for a decline in price, due to more cattle inventory being discovered, and every reason under the sun was noted as a factor that could derail cattle prices. Another was that, at times, peak fundamental shortages or gluts don't necessarily always produce the highest or lowest price.  With this fundamental situation known by all, one would have to consider that shifts in production have already been made to counter the lower inventory. Lastly, there was as strong of an opinion for $400.00 feeder cattle as $300.00 feeder cattle, and potentially both, in a very short period of time. 

If there were any surprise to Fridays on feed number, I think it would be that the findings met the pre-trade guesstimation and prices fall.  How could that be?  There just isn't anyone that doesn't know about the fundamental situation and if this is the lowest numbers, there are 11 more months of the year for improvement.  There has been a noted shift in who is assuming the risk of the industry. For a while, the cattle feeder was the one piling on projected negative margins, but that has dwindled with the really low placements of December, leaving backgrounders now holding the bag as to the ownership of the most expensive inventory in history with a very inverted price scale of feeder cattle futures contracts.  In other words, backgrounders have paid top dollar in the cash markets with nothing but discounts going forward to hedge with.  This week's trading is believed void of a lot of human intervention, recognized by the enormous volatility and price expanse in very short periods of time. Humans just can't react that fast.    

Consumers continue to be faced with rising retail beef prices on the grocery shelf, as well as menu prices.  There is little evidence of slowing consumer demand, but no increases either, just shifts in what they eat and where.  Grocers and restaurants have raised shelf and menu prices while box prices have fallen; that has helped to reduce negative margins or increased positive ones.  Packers continue to cut the slaughter pace in an attempt to back cattle up in the feed yard, producing less beef to market, in expectation of a rise in beef prices.  Now, it appears cattle feeders are attempting to place fewer cattle on feed, lowering the amount of inventory available to packers and potentially backing up feeder cattle in the grow yards and ranches.  At present, there is believed to have been a dramatic shift in who bears the weight of the industry, noted above.  How this group deals with the management of excessive working capital at risk is believed different than those of a feedyard; that may or may not be associated with a vertically integrated supply chain. Open interest is higher in feeder cattle, but so far, it is believed that fewer backgrounders are hedged, or they have chosen to use lower strikes and cheaper premiums as the clarity of hindsight is still very much a mindset.  That mindset believed being:  "I won't make the mistake twice", or worse, "they can't go down".  

Corn finished the week a little higher; diesel fuel is up $.35 over the past three weeks, and the price of money, pretty much unchanged via interest rates. The President continues along a path of increased inflation with quantitative easing in full swing, still potential cash payouts, and subsidized farming, all moving towards inflating further. He wants the inflation to keep equity share prices high.  Unfortunately, he also wants cheap commodities for consumers. So begs the question, do commodity prices move in tandem with inflation, or are they impacted by the inflation?  We are finding out every day.  

 “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.