Shootin' the Bull about getting what you asked for

“Shootin’ The Bull”TM

by Christopher B Swift

8/14/2026

​Weekly Recap:

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In my opinion, traders started digging the Tiger trap early this week, believed in expectation of Friday's news. Observations last week of the inordinate trading was a clue to the mass.  The significance of the basis spread kept the bad news from becoming worse.  Traders were quick to disperse the energy at the opening.  New lows from contract high suggest the down trend has resumed.  It will take a few days, and a lot of dollars, to confirm any sort of reversal.  The closing of the Tyson plants is great news for all those that will absorb their production.  This is what the cattle industry wanted, was to break up the majors, so they pretty much got what they asked for.  I think it will take 4 to 6 weeks to find new hook space and those in receipt of will be most grateful. Until then, the August futures, and maybe some of October, will have to contend with the cut in capacity until redistributed. Box beef prices improved this week, but faded towards the end.  Slaughter manipulation is the only factor influencing box price.  If it were consumer demand, the industry would not be losing so much money.  

Cattle feeders and backgrounders will have to work diligently in managing the width of basis.  Everything hinges upon where you are short, how you are short, or if you are short.  If short, there are actions you can take to manage the basis spread.  Rolling down in the money puts, selling puts at lower strike prices to form a bear put spread, or buy call options to capture open position equity while maintaining the long-put position.  If unhedged, you are at risk the basis, regardless of what you do.  I do not recommend selling futures, as that would lock in the loss of the basis with no way to improve.  At this juncture, protection against further price erosion should be the goal. Options will help to manage a portion of the basis, but not all.  Downside targets for both fats and feeders remain at the November of '25 low per respective contract month. 

Outside of the cattle input costs rose sharply this week.  Traders were able to exceed Wednesday's rally high in corn, made from the WASDE report.  December corn closed $.21&3/4 higher than last Friday.  Diesel fuel made new contract highs this week. It closed $.38 higher than last Friday and bonds were down slightly.  December corn is believed to have formed a wave 1 and 2 with expectation of a major wave 3 rally to $5.64.  A trade above $4.92 will help to confirm wave 2 complete and wave 3 in progress.  Wheat soared higher this week with KC leading the way.  When overlaying the HRW region with the drought map, it appears that nearly 75% of is in a drought, if not severe.  Wheat is anticipated to move higher with KC leading the way.  Beans continue to fall short of expectations, but I do have high hopes for a resumption of the uptrend. The energy component of bean oil is expected to keep a firm undertone on beans.  Energy is expected to continue higher as there is no increase in refining capacity and demand remains strong.  Military actions 6,300 miles away is expensive and US farmers are already chopping silage and in wait of harvesting 180 million acres of corn and soybeans.  So, barring a Trump tweet to influence his position, or some form of settlement in the middle east, energy prices are expected to remain firm with a test of the March high around $4.80 to be tested.  Gasoline is running second, and there is no letup of consumers that had rather drive than eat. There isn't expected to be any reprieve from inflation, the rate of, or government spending.  Therefore, inflation is expected to continue.  When adding commodity inflation on top of core, it really gets sticky to the consumer.  Noting the proximity of the Dow Jones Commodity Index to historical high, and seeming resumption of the uptrend, it appears that commodity inflation is set to move higher.  With the grains and oilseeds picking up steam, the combination of with energy is expected to produce a new historical high in the DJ commodity index.  

 “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.