Shootin' the Bull about doing such a great job, everyone wants to join in

“Shootin’ The Bull”

by Christopher B Swift

2/27/2026

Live Cattle:

In my opinion, cattlemen were provided ample opportunity to manage price and basis risk at the top end of the price range this week and last, and one of the narrower basis spreads in months.  By Friday's close, the price collapsed in futures, didn't move any higher in cash, and basis spreads widened significantly.  All at a time when a huge transfer of inventory took place last week and this, in the physical market.  Buyers the past two weeks own inventory at the top end of the cash market, if not historic, and nothing but sharp discounts in the future, or potentially waiting for months on a higher price, to manage the capital outlay at risk.  How ever off my timing has been, this week is the scenario that has been attempted to be avoided.  Via the May contract, it only took 6 days to push prices well under all of this year's trading, and started into last year. Having anticipated the decline to be sharp and fast, kept me urging producers to get something done while the price and basis were perceived as advantageous. Now, there is as much possibility that there won't be a price recovery as there will.  With cash believed starting to slip as well, futures traders will be anticipated to continue to keep a wider basis spread.  What we don't know is, who was long the market, since there was so little fund participation in this recovery rally?  I think it possible that cattlemen and speculators are long the market, with cattlemen potentially leveraged in both cash and futures.  The most aggressive price gains were from the bottom on 11/25 to the January 6 high, and believed as pretty much short covering.  After such, the reverse symmetrical wedge began to be built, as well as open interest. It is at this price level, above the January 6 high, per respective contract month, that I believe the majority of long positions were established.  There wasn't that many either, another reason to think it is cattlemen and speculators.  Nonetheless, the price action has followed the Moore Research seasonal tendency with expectations of it weakening further into March and April.

The supply story is long in the tooth as described by Scott Shellady and Dr. Derrell Peel, when they discussed Friday morning, how many times can we say the same thing? This will help to strengthen the idea of a contracting price pattern with this month's high being the top end of this move.   A move lower, but potentially not as low as the December '25 low, is expected at the moment, and should continue to trade sideways in lesser price moves, to eventually create a wedge, or marking of time by the end of the year. The marking of time, up and down, will be expansion.  It suggests we know more cattle are going to be coming, but on the forefront, those heifers will be missed in the kill. I continue to believe that following the seasonal tendencies will benefit producers.  With sales made around the middle of February, it appears for the moment that these may be the highs for the year.  When summer rolls around, and beef demand picks up, I will anticipate the seasonal tendency to be higher going into August, but again, prices may not come near current highs made in February.  Lastly, cattlemen have bid inventory to levels that have encouraged other producers, outside of the US, to increase production capabilities.  Mexico has begun feeding their own cattle and are building processing capacity to slaughter them.  Whether the border opens or not, a percentage of this business is gone for good.  How many cattlemen, or how much production, has to be sacrificed for the screw worm? This issue has solidified great benefits for producers in the north, and is now causing production in the south to go out of business.  Many, at the onset of this, suggested we didn't need those cattle to begin with. They were only a small portion to the mix. However small to the mix they were, it was the majority of some's business.  As well, it literally allowed for a cornering of the market to those not impacted by.  This is easy to see with so many long fed cattle in the north.  Brazil has nearly twice as many cattle with all the corn needed to fatten them with. Comments today suggested a record Brazilian corn crop.  While not noted for grain fed beef, they do have a fledgling start and all of the capabilities to grow quickly, with China their main customer.  Canada continues to be a heavy presence in the US markets for cattle.  They have found a way to be profitable feeding cattle and selling beef to China, once again circumventing the US in beef.  This is world production growing from the coattails of the US cattle producer.  Note that similar situations have taken place with grains and oilseeds, as the price for US commodities continues to produce incentive for others, who can do it for less, to do so.     

All of the above may be a moot point were further action in the middle east to take place over the weekend.  Any further escalation has the potential to push oil up sharply.  Even if for just a short period of time, but a $10.00 to $15.00 higher trade on Sunday evening could be where all new fuel purchases start, regardless of how long it stays higher. This week, crude and the products resumed their uptrend.  Consumers continue to deal with a lower rate of inflation, but still growing nonetheless.  Were commodity inflation, besides beef, start to impact their discretionary spending habits; consumers would be anticipated to shift aggressively into a more conservative spending mode.  If there is any truth to the two-tiered economy, K shaped, or 10% of consumers producing 50% of the spending, higher fuel prices would be anticipated to impact the majority, on the bottom tier, and slow the spending of the top tier to a point in which it is noticeable. The rate of inflation crept up a little from the last PPI data.  As well, stimulation continues with varying short-term bills offered next week to the tune of 256 billion dollars. The loose monetary policies of the US and China are expected to continue, as no one wants a collapse on their watch.  Commodity production can be, and a lot of times is, boom or bust.  It is difficult to maintain demand and supplies when agriculturally grown, and dependent upon many more factors that can disrupt both, and can't be controlled.  I think it wise to look back at history and see that no commodity remains at highs or lows consistently with cattle at the tip top of a historical price. 

 “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.