“Shootin’ The Bull”TM

by Christopher B Swift

9/4/2026

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Weekly Recap:

 

Live Cattle:

In my opinion, the wall of worry steepened sharply this week. Cattlemen, in every sector of production, appear to have rushed at the chance to assume more risk.  Bidding feeder cattle sharply higher, of their fat cattle counterpart, is reminiscence of the February, May, and June highs, where cattlemen couldn't get enough of the negative margins. Knowledge of sharply higher fuel price, and no better corn price, seemingly were passed over for the belief that cattle prices will soar higher to overcome increased input costs.  Futures traders were of little help as spreads between starting feeder and finished fat widened.  It is possible that with this week's higher cash trade, the loss per head may shrink slightly. However, more likely than not, when placed, the feeder cattle were even higher.  So, it may be a draw.  Negative projected margins are expected to worsen with fuel costs, and most of that not even seen yet on the retail side. Consumers won't be expected to rush out and buy more beef, or be willing to pay a higher price, as gasoline prices will inhibit discretionary spending habits.  This looks eerily similar to first half of the year where cattle feeders loaded up with extensive negative margins.  What's different this time?  I don't think anything.  The discrepancies between cattle and beef continue.  There is ample beef, a shortage of cattle, and ample production capacity.  There remain questions about Mexican cattle imports and further trimming imports.  Neither of which would be considered bullish if come to fruition.  All in all, it looks like the same fundamentals are in transition, causing some to become overly bullish again, while others remain cautious. 

 

The February, May, and end of June high caused a reality check of the old adage, "markets can remain irrational for longer than one can remain solvent".  My personal problem with this was not solvency, but psychology.  I simply could not see the beef market supporting the ever-higher cattle price.  Fast forward, and it still doesn't.  This makes the current rally even more interesting as it appears cattlemen are starting to revert back to, the skies the limit.  It may well be.  I think what we are seeing is that a major wave A has been completed and a corrective major wave B is in progress. In the transitioning phase, it is normal for bulls to be more bullish and bears more bearish.  Upside retracement levels were just starting to be reached at Friday's high.  However, with feeder cattle up more than twice of fat cattle, little ground appears to have been gained. While working through the wave B, and in anticipation of a wave C decline, you may have a little more time to put pencil to paper and see what you did and did not like about prices at previous lows.  The wave B can unfold in various wave sequences.  For the moment, there are 3 waves up from the 8/26 low.  This may be all of the B wave we see, or could unfold in a multitude of ways that would mark time and create several smaller wave sequences. Managing the wave B correction won't be easy. I do not recommend using futures, as working capital is already strained.  As well, the irrationality displayed over the first half of the year may be only a preview of what is to come.  I recommend just buying the at the money put option.  Then, were prices to move sharply higher or lower; adjustments to, may help reduce initial premium paid. With the amount of price expanse being traded, I don't think you can leave any stone unturned in the management of this immense capital outlay, in an exceptionally volatile market, with great potential for consumers to contract in discretionary spending. 

 

Grains and oilseeds were lower on Friday's close, but all remain in an uptrend and skated through the WASDE report with a lot of flair, but not a lot to go on for increasing the yields in corn.  Beans made their contract high on Friday, so all they did was sell off from contract high.  Bean oil held about half of this week's gains.  The flirtation with the top appears to be putting up a little resistance.  Of interest to me is what the situation will be if upside targets are met in grains and oilseeds.  With new contract highs made in crude, diesel, and gasoline on Friday, the uptrend remains intact.  I anticipate even higher as developments this week intensifies the middle east situation. With military actions by Iranian backed militants this week, it opens up a brand new can of worms.  If the President pulls out, the region could fall into further chaos and create worse strangleholds than already exist.  As well, it could open the door for more Chinese and Russian interaction to make sure they get what they need from the region. If the conflicts escalate, and the President intervenes, the region could fall into further chaos, and create a long-term occupation of the area to defend.  Neither of which is believed good.  With no increase of refining capacity, and military actions still active around the world, there is no telling what may be next. Bonds and notes made new contract lows this week as inflation is soaring. This week's CPI and PPI data are believed woefully behind the eight ball in reflecting the actual inflation consumers feel when purchasing anything. Headlines were made with "back to the wall" bold statements from Bessent this week.  "I am the house" was as bold of a statement as I have ever heard.  When hearing things such as this, the only thing I can think of is how many want to pull the rug from his feet.  By weeks' end, traders pushed bonds and notes to new contract lows, basically pulling the rug from under his feet. No change this week of the economic train running at full steam with coal, wood, and anything that burns being poured into the firebox. Keeping the equities market well fed continues to be the agenda.  

 

 

 “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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