“Shootin’ The Bull”
by Christopher B Swift
1/28/2026
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.
Basis improved greatly today. Thin trading from lack of human participation is believed to have allowed the computer generated algorithmic programs to dictate trading. This has been exceptionally beneficial to cattle feeders. With recommendations having been made, that covers a multitude of ways to manage the risk assumed, there isn't much to do or comment on. Cattlemen are bullish because there are fewer cattle. Most everyone else is dealing with poor margins, no margins, or negative margins, with cattle feeders and backgrounders alike in ownership of historically priced inventory. The current situation is a "have to". Prices of cattle have to go up to return input costs. Whether they will or not is the reasons why risk management has to be discussed, and when in a very friendly basis environment, urged.
Feeder Cattle:
A tremendous amount of cattle have changed hands in the month of January so far. Sellers have never been rewarded more handsomely and buyers, well, that is to be seen. The shifts that started with consumers moving to hamburger meat, then grocers and restaurants ratcheting up prices, packers reducing slaughter rates, and now cattle feeders placing fewer cattle on feed, suggests the rationing has fallen squarely on the shoulders of backgrounders and the sectors underneath.
Today, futures traders have turned exceptionally friendly towards backgrounders by pushing basis to negative in a few of the front months and narrowed greatly in the back. Because I think the majority of the buying was day trading and done by computers, the narrowing of basis may not last, and would become susceptible to having the rug pulled from underneath were cash to not react in the same manner. So far, cattlemen have shown some reserve, as seen by the index not moving higher in leaps and bounds. Whether futures traders, or computers, the help they provided today, by allowing producers the opportunity to market into the future at little to no discount, is a huge help to producers.
No one wants to repeat last year of hedging too early or having hedged at all. Hindsight is 20/20. However, the same, if not more, working capital is at risk today as it was a year ago. This begs the question of, "do you potentially make the same mistake twice", missing out on what is not known until the future materializes, or "do you potentially make a different mistake", and not manage the risk of potential adverse price fluctuation? Here is a way to help. If you do not hedge, you do not know what the end result will be in your marketing without a forward contract or part of a VI supply chain. If you do hedge, you do know what the end result will be and now, you just have to live with it. Last year was believed exceptional in price fluctuation and profit margins. Many think that will be replicated, if not exceeded this year. I do think you will see significant price fluctuation, but I anticipate a contraction in the price ranges with current highs potentially the top end of this segment of what could turn out to be a huge triangle.
Corn:
All were higher today. I have no idea why. Of the only concern is that corn is not getting cheaper after the break lower.
Energy:
Energy is higher again today with a fledgling bull market in play. Crude led the way higher today. Saber rattling with the US armada steaming towards Iran may be some of the strength. With crude now trading above $63.00, there runs the chance of a significant marketing of inventory were this situation to subside without actions. The combination of the two is anticipated to make for significant volatility and price expanse in very short periods of time.
Bonds:
Bonds are lower. The Fed didn't cut rates. Without lower rates and the quantitative easing in place, the economy would be anticipated to stagnate. Were something to impact the spending rate of the 10%, supposedly making up 50% of current spending, a collapse would be anticipated. Simply know that a bull market has to be fed and the stock market eats money and nothing else. At the moment, it appears the market is being force fed.
“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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