“Shootin’ The Bull”

by Christopher B Swift

​7/30/2025

Live Cattle:

Futures traders narrowed basis considerably this week. The barrel packers are over is worsening with cattle higher and boxes lower. While immensely beneficial to cattle feeders, and all sectors below, it is believed causing significant incentive to find a way to reduce the negative margins, or boost margins of other competing proteins by packers.  This leads to speculation that someone, at some point in time, will have to do something to find margin. The extent of which could be significant.  Up to today's close, all marketing decisions have fallen short of what could have been. This continues to embolden cattle feeders, leading to paying a wider spread between feeder and fat, and remaining solely dependent upon a higher price. Current price gains are stupendous with today's move alone up 1.4%.  

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I recommend buying at the money put options on every newly acquired head placed on feed, in the contract month you will market the closest to, and roll up any lower put strike price that can produce a higher minimum sale floor.  This is a sales solicitation.  Higher prices are expected to further ration the amount of production and processing capacity. 

Of great concern is the President's use of tariff's.  While I have no doubts they are well meaning, with an objective attached, but having watched copper go up just short of a dollar in one day, an 18% gain on July 8, and down over a dollar for just shy of a 20% loss in one day, are extremes in commodity trading that few are capable of managing.  Cattle have benefited greatly from the President's tariff's on imported beef, as well as protectionism at the southern border.  Is the cattle/beef industry immune from such action?  Is this meant to be a scare tactic?  Absolutely not, it is scary without any tactic associated at all. If there are no more cattle, and the same amount of feeding capacity is intact, who gets them?  The one paying the most. This is a deep pocket's move to vertically integrate the beef/cattle industry in an attempt to reduce risk of procurement of inventory. Note below the price action of copper and know that you are dealing in a commodity that has the exact same potential to move higher or lower in dramatic form.  At current limits and then expanded, it could take up to 5 days in a row of limit down the first day and expanded limits the next 4 to move the same as what copper did in 2 hours.   

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Feeder Cattle:

Read the above and own at the money put options on every newly acquired head you have paid a historical price for. This is a sales solicitation.​

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​Corn:

Traders were able to keep corn plus on the day, but continued the trend lower in wheat and may have started a test of the lows in beans.  ​​

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Energy:

​Energy continues higher.  The GDP was better than expected, equities at all time highs this week, the President wrapping up trade deals with those who will trade and raised or levied tariffs against those who do not and cattle at all time highs, how much better can it get?  With energy on the rise, and believed a significant issue in shifting consumer demand, I anticipate the consumer to get another bout of commodity inflation with beef already sky high and seemingly not moving as well as some believe.  I do not believe there is any increase in beef consumption, simply because beef production is down.  How can consumption be higher if production is lower?  What has changed is believed the willingness to pay.  If that is the case, anything that hampers the willingness to pay should be paid close attention to. 

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Bonds:

Bonds were lower.  The triangle continues.  With inflation still cooking, and commodity inflation elevated, and the potential for further elevation of price, it leads me to anticipate lower bonds.  However, due to the Fed excluding food and energy from their calculations, it is possible that rates are lowered, and inflation on all fronts takes off again. There are so many moving parts, it is difficult to gain any form of assurance of the next most probable move in anything. 

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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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