Shootin' the Bull about lines in the sand

“Shootin’ The Bull”

by Christopher B Swift

2/26/2026

Live Cattle:

Basis widened significantly today as futures traders head south and cattle feeders continue to bid north.  Although I have seen some softening bids for feeder cattle, and now reflected in the index, the slow melt of cash suggests cattle feeders are still laying in some of the most expensive inventory in history.  Last week saw a sizeable increase of open interest with longs being turned upside down before the weeks close.  Wednesday saw another increase of open interest, only to be upside down today.  New longs own the top and new shorts have marketed at the top. 

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The close below $239.10 April sets the stage for some definitive points of interest. The first is that it may point to or lead into a 5 wave sequence lower with waves 1 & 2 made and 3 in progress.  The next is that I would not want to remain short on a close above $243.42 April.  With a contracting pattern in tact, and potentially some softening in the cattle market, I anticipate a decline that mimic's the Moore Research seasonal tendency in time with a price decline to approximately $220.00 April.  This will keep in line the contracting pattern and may be the start of much smaller price moves as time is seemingly needed more than anything.  A contracting, sideways pattern is a marking of time until the next fundamental takes hold to produce a trend. 

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Feeder Cattle:

Basis widened to a new width since the 12/1 date in the May contract.  Now positive by more than $19.00, it reflects how serious the basis needs to be taken.  I stated on the mid day cattle comment that my opinion was that more producers hedged today, in a very poor market environment, than on Wednesday, when basis was much narrower, with spreads between bid/offer and between trades were much smaller. I was told at the start of my career that fear and greed move markets and I believe that more today than 36 years ago.  In my opinion alone, greed will keep producers from hedging and fear will cause them to react at the most inappropriate time. 

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As above, there were some definitive price moves that will help to draw a line in the sand for what to do next.  The close under $357.97 May produced what is believed a wave 1 and 2 with wave 3 in progress.  Although not an admittance of guilt or wrong, but I don't want to be short feeder cattle on a close higher than made on 2/18 per respective contract month.  Until then, I anticipate further downside movement with basis anticipated to widen significantly and cash move at a snails pace.  

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​Corn:

Corn is trickling up.  It is lethargic in trading, but does have a slight up trend started.  I'm waiting for a higher or lower price to market the next round of new crop.  I recommend today to own the at the money, or slightly out of the money, July corn call option.  This is a sales solicitation.  I recommend this for no more reason than to make sure expensive corn isn't fed to expensive cattle.  Beans shook off a sharply lower trade on the close to regain almost all of what was lost.  Bean oil continues to make new contract highs. 

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Energy:​

An exceptionally volatile day with a wide price expanse.  More saber rattling with the middle east caused a sharp rally after negotiations seemingly turned sour.  Before the close, traders wiped out almost all of the gains and closed down on the day.  With a new high in this rally having been made in the diesel fuel, it leads me to believe the up trend is resuming.  Top off farm tanks or book some spring planting fuel is recommended.  If the situation blows over and diesel falls back to the $2.00 area, about $.53 from today's trade, how will that impact your input costs for planted acres?  Now, do the same calculation on a $3.00 price, about $.50 higher, and see what the end result would be.  Knowing what your farm equipment will burn through in a planting season will help make this calculation pretty easy to see which way you should be leaning. 

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Bonds:

Bonds were higher, but not by much.  Again trading over 118'00, the up trend remains intact.  I anticipate bonds to move higher as the government continues to stimulate with 89 billion in 3 month bills and 77 billion in 6 month bills on Monday and followed up on Tuesday with 90 billion in 6 week bills. The loose monetary policy is on full display, and literally has to, in order to keep everything moving higher, notably the stock market. ​

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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.