“Shootin’ The Bull”

by Christopher B Swift

​8/5/2025

Live Cattle:

Traders in both fats and feeders got to revisit, or close to, the contract high made last week.  Having lost so much open interest last week in the fats, there may be ample to come back in to push higher, or they could as easily remain out, potentially trading lower without the renewed buying interest.  There is one thing for sure, the market has the attention of everyone, whether producer or consumer.  Cattle feeders are believed holding the key to price movement with their ability to pay a wider production spread in a positive basis structure.  If purchased today, they have placed the highest inventory on feed, at the widest spread between starting feeder and finished fat in a projected negative profit margin.  I think this reflects great desire to compete, with deep pockets helping to fund such.  I recommend you own the at the money put option on every head of inventory you have on feed and hope, depend, or rely on a higher price to offset the premium paid.  This is a sales solicitation.  I continue to expect considerable volatility and price expanse in the coming days.  Yes, even more than what has been witnessed the past 5 trading days.  

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Feeder Cattle:

The price of feeder cattle, and all weight classes under, are being held up by the cattle feeder.  They are paying more for incoming inventory than able to market into the future at a projected profit without further price advance of fed cattle.  They are paying a wider spread than ever before to attract inventory to their yards.  As well, they are holding back cattle for as long as possible to gain more weight, denying packers of desired inventory to process.  I recommend considering the cattle feeder as the key and not the consumer, packer, grocer or restaurant at this time.  Anything that disrupts the cattle feeder, believed exposed in more ways than one, would be anticipated to drop the bottom from the feeder market and quickly.  Recall that no mention at all was given about cattle or the border reopening when President Trump renegotiated the tariffs on Mexico.  Imagine had they mentioned that?  So, while cattle feeders are in the market for market share, keep the chock's under the wheels.  

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Corn:

Corn has resumed its down trend with a target between $4.00 and $3.90.  Wheat has resumed its down trend with no downside projections available.  Soybeans tried to stave off the selling, but ended the day lower. I remain friendly towards beans, but they are not reciprocating at the moment. 

Energy:

Here is where it could get dicey.  I has been bullish energy with aspects that the economy was in better shape than appears at the moment.  The miss of the Unemployment report, and significant revisions, suggests the economy hasn't grown in employment and there are not all those new consumers with jobs going to be buying more beef or gasoline, or anything.  Worse, a lower energy price, without increased production, suggests a weakening of demand.  I think that is where we are at the moment with diesel fuel reflecting what may be a softening economy.  Gasoline did not move nearly as high as diesel fuel, and since it is the energy source of the consumer, it not having gone up equally to diesel, and now both lower, it increases the likelihood of maybe some recessionary aspects developing.  While I am hesitant to say it has begun a bear market, energy is no longer considered bullish at this time. ​

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Bonds:

​Bonds were pretty much unchanged to a tad higher today.  Notes were soft.  The breakout to the upside in bonds from a triangle is believed the path of least resistance for the time being.  Higher bond and note prices create a lower interest rate.  A lower interest rate is desired when economic stimulation appears needed.  At present, I am unsure whether a lower rate would do much to ease the inflation caused by most goods and services.  What it could do is spur another round of inflation that may cause more harm to the consumer than the lower rate did good.   

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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.