“Shootin’ The Bull”

by Christopher B Swift

​9/11/2025

Live Cattle:

Basis will be an issue to contend with for quite some time to come.  The basis swings merely increase or decrease the amount of risk a producer will assume when using futures or options.  At present, the positive basis spread is approximately $5.75 when using $240.00 cash and December futures.  December is approximately $9.32 from contract high at today's close.  Due to the width of spreads, cattle feeders having placed historically priced inventory, and a belief that hedging will help to mitigate potential adverse price fluctuation, I recommend you put pencil to paper to measure the price spreads to assess what you are willing to assume, and what you are not. Unfortunately, what may materialize is that production is going to encompass even more working capital whether you hedge or not.  I continue to believe futures to have topped for the time being with expectations of immense volatility and price expanse to occur through the remainder of this year. I have three factors that lead me to anticipate a return to the July 2 low per respective contract month.  The angle of ascent increased, the oscillator had traded below the zero line, and there was a sizable increase of open interest.  With a belief the rally from July 2 was "a" or "the" 5th wave, the next most probable move suggests a decline to the wave 4 low of the same magnitude.  Again, this is not expected to be straight down, so plan in advance for a rally to a level you would be willing to take action and be prepared.  

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Feeder Cattle:

Dollars in seconds is the most recent norm in the feeder cattle market.  As above, I believe a way to approach the wide basis spread, and seeming shifting fundamentals, is to calculate price levels you would be willing to take action and be prepared.  As producers continue to explore the reach of price for which someone will pay to remain in the cattle business, all other fundamentals will be working with no regards to extent of risk you have assumed. Like the fats, I anticipate a return to the July 2 low, per respective contract month, and maybe before the end of the year.  Even though the industry may not have reached the limits of what someone will go to, it appears that some are having to rethink how much better it can get, or how much better it will have to get in order to return input costs.      ​

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​Corn:

Grains are having a difficult time moving lower in what appears as somewhat bearish harvest fundamentals.  However, like the Mexican border looms over cattle, a grain deal with China has the potential to set the woods on fire.  I think a lot of corn and beans will be attempted to hang on to for just such an event.  While I am not bullish corn, it isn't going down and know a great deal of the expectations for returning input costs on cattle was in relation to a lower cost of gain. 

Energy:​

​Energy turned tail and headed south today.  Inflation is believed hampering consumers and barring beef, it is not commodities that are causing the inflation.  It is every little increase in fees, service and excess charges, in every field, that is being added that is causing the non-stop rise of inflation. As well as massive government spending, tariffs' and the government having to buy its own debt.  

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Bonds:

​Bonds firmed again today, mostly because of every thing stated above. Inflation continues and it is believed helping to further separate the believed two tier economic status. Kroger's CEO made statements today that were comparatively close to what McDonald's CEO stated last week.  As well, sales were even with last year, but noted that pharmacy sales increase and eCommerce were the drivers.  ​​​​

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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.