“Shootin’ The Bull”

by Christopher B Swift

​8/7/2025

Live Cattle:

The squeeze tightened further for which some are able to manage risk in a poor positive basis in fats, while paying premium for feeders, some are trying to just keep up with this production scheme, and some that won't be able to.  The squeeze is believed in an attempt to garner more market share.  There is too much production capacity for the number of animals available, with a belief that commercial yards are attempting to squeeze out the farmer/feeder that has grown in capacity and has a lower cost of gain.  What makes this obvious is the spread between starting feeder and finished fat.  The wider the spread, the more increase in fat cattle price will be needed in the future, or significantly lower cost of gain to return inputs.  The industry is shifting in seismic measurements.     

 

Futures traders remain reluctant to cover anything close to a breakeven price out into the future.  While they have moved higher in conjunction with cash, they still remain at a discount to cash.  As of the close, all recommendations, by anyone, to have marketed other than at the close today, have been to no avail.  This aspect is believed emboldening producers, new comers, and old alike, to assume risks of a business venture that begins with a significant negative margin for which expectations of profit are solely dependent upon projected factors materializing in the future.   

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Feeder Cattle:

As above, all recommendations to hedge, market, or attempt to alleviate the potential for adverse downside price fluctuation has fallen short of expectations.  This leads me to have no doubt that further recommendations will fall short of expectations.  Knowing this, but understanding the squeeze and backwards production scheme of paying inflated retail, and only able to market at discounted wholesale, leads me to also know what the price action may be were the southern border to open, further decline of processing, any shock factor the President may present that impacts beef, or shifts in consumer demand becomes more noticeable.  I don't think any retailer lowered meat or menu prices due to the decline of box beef.  I believe they maintained the highest shelf/menu price and used any lower purchases of beef to increase margins.  With boxes now on the rise, the consumer is expected to see higher prices with grocer's and restaurants continuing to be inventive in ways to skirt the low to no margins in beef sales. 

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Corn:

I have read that farmer selling was abrupt the past several days. I also calculated that it will take 8.6 loads of corn to buy 1 load of feeder steers.  At this spread, it is believed that even the farmer/feeder may have a difficult time returning inputs having to trade that much corn for cattle.  Corn was higher today, but a long way from breaking the down trend.  If farmer sales were enough, we may see corn form a sideways pattern for several weeks until harvest begins to reflect anticipated yields.  Beans were a little higher as was wheat.  I remain friendly towards November '26 soybeans and will look to be a buyer again if is able to reverse higher.  

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Energy:​

Energy ended the day lower.  I anticipate energy to soften.  I don't know if a bear market, but the lower it goes, with no increase of production, suggests demand is lower and that is a sign of a weakening economy.  A trade under $61.99 October would lead me to anticipate a bear market beginning.  

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Bonds:

​Bonds were soft, but saw both sides of unchanged.  The gains made a week ago Friday have been able to be sustained, although a few bouts of volatility were injected at the most inappropriate time.  Bonds higher and energy lower are believed signs of economic weakness.  The President's desires to see a lower interest rate is a good reflection of the economic weakness he may be trying to stave off.  

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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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