Shootin' the Bull about changes taking place in cattle production.

“Shootin’ The Bull”

by Christopher B Swift

2/23/2026

Live Cattle:

The loss of Mexican cattle to produce has come home to roost.  More feedyard capacity is anticipated to move out of production without a reopening of the southern border.  The north end of cattle feeding is front end loaded with long fed cattle that now resemble a buffalo in size. A combination of a potential "have to" situation that would push more of those heavy cattle into the slaughter mix, and fewer bidders in the south may well have "rationed" enough producers for which the price may start to move lower.  Recall, the past 12 to 24 months has been the garnering of market share for which has most likely produced a tremendous leveraged position for some, and the others, that may have helped create volume, have been pushed out of the market.  Rationing may well have taken place enough to begin to curtail the higher prices.  Nonetheless, the seasonal tendency is weaker into May, basis widened further, and all of last weeks newly acquired long positions in futures are upside down. 

I believe that multiple lines of vertical integration have been formed over the past several years.  The amount of capital that was created by Government, and flowed into hands with intentions to build a cattle business, have done a great job in garnering market share.  However, now having the market share, keeping it through a potential down cycle of prices will be the next trick. this can be done, even though seemingly at significant discounts.  Long way around the barn to say that inside of a vertically integrated supply chain, producers need to be looking at marketing fats between February and June of '27.  Trouble can be significant if marketing before procurement.  This can lead to realized losses in futures or options and then still have to pay a higher price for the inventory.  Since in a VI supply chain the smaller animal is already owned or under contract, there is no risk of selling something before you own it.  This brings up the point for you to look at the price scheme going out to April of next year.  With August through April within a dollar of one another for over 14 months out, and no telling what will happen a year from now, there are ways and means to market at the highest known price available, and still have portions of profit potential to anticipate.  Billions of dollars have been spent on new feeding and processing facilities in the northern parts of cattle and fed cattle production.  Large cattle companies have grown bigger, and retail outlets don't want to experience any more loss of margin than what they have just been through.  With so much expansion of the cattle business having taken place the past 4 years, with no more cattle, the leverage of some has to be tremendous.         

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Feeder Cattle:

​The "Cattle Range" has some of the best statistical information that I can find in one place.  To start with, more stockers and feeders were marketed last week than the week before, the year before, and 3 year average.  A huge transfer of risk from sellers to buyers took place last week and maybe more this week.  Cattlemen are believed "catching up" from some of the weather a couple of weeks ago.  This is most likely the reason for the increased volume.  Price has a lot to do with it as well.  With new historical highs in just about every weight category, and the futures not doing such, leads us to the first point of divergence. As well, the price of lighter weight animals continues to diverge from the fed cattle price, widening the negative margins to new widths last week.  All in all, there is only one thing that will help, a significantly higher price, and the stability of, for a good 8 to 12 months.  Other than this, anything that reduces the price would be anticipated to cause losses of significance. Input costs are low, and not expected to get low enough to offset purchases of inventory.  Were input costs to rise, for whatever reason, it will compound the situation further.  Cattle and feeder cattle are in a weaker seasonal tendency until the first of May.  I recommend adhering to the seasonal tendency.    

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​Corn:

​To start right off, I am going to be talking out of both sides of my mouth. I continue to see nothing bullish for corn at the moment and will look to add to marketing averages for farmers at above $4.75 or below $4.30 December.  Almost in the same breath, the acres that beans will take from corn, and maybe some form of worse drought than the past three years, hampers yields more than improves them, leads me to want to spend $.15 to $.20 on July corn calls.  Probably for nothing, but I will ask you to do this; subtract the loss of $.15 to $.20 per contract for an option premium to your bottom line and see if this impacts your profit margin as much as what a $1.00 rally would do, with nothing on.  Bean oil continues higher because diesel fuel is leading the way in energy.  More on that below.  Soybeans are trying to keep up and meal is being used to sell against.  I anticipate more of the same.  Biofuels could be a spark to the corn and soybeans that keeps them priced at levels above feedstuffs.  ​

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Energy:​

Energy started off the Sunday session weak, but has since been plus on the day.  Diesel fuel is leading the way and now up $.54 since 1/7.  It is leading the way as military actions have increased, and barring nuclear powered ships, most things run off diesel fuel and jet fuel, diesels first cousin. Crude oil was lower for most of the day, but only by a little and gasoline running behind.  Gasoline has the potential to not have the same demand as diesel fuel as higher fuel prices to the consumer can hamper demand.  Until further resolve is seen in the middle east, I anticipate energy to trade higher.  Were an escalation to take place, sharply higher would not surprise me.  It shouldn't surprise you either having been recommended to top off farm tanks and book spring fuel needs. What you do not want to happen is to wake up to a $5.00 to $10.00 rally in crude or $1.00 rally in diesel fuel, and that is where your morning begins.

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Bonds:

Bonds were higher, as there remains more effort in stimulation than curtailing of inflation. I anticipate more of the same. The loose monetary policies of the US and China are expected to keep inflation rising.  Were conflict to arise in the middle east, and send energy prices soaring, the combination of core and commodity inflation would be anticipated to impact the spending habits of all. ​​

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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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