“Shootin’ The Bull”

End of Day Market Recap

by Christopher B. Swift

​3/27/2025

Live Cattle:

Skepticism continues to be expressed by futures traders in the form of the positive basis, and enormous volatility.  Those within the industry are believed being sucked into a vortex they can't escape. Prices that seem unsustainable are having to be paid in order to remain in the cattle feeding business.  At this point, all profit margins hinge on an ever increasing price for cattle and beef.  What can be done about it?

On the mid day cattle comment, I recommended to buy the $200.00 February '26 put and sell the $210.00 call.  This is a sales solicitation.  For those in vertical integration and know they will be in business this time next year, this recommendation is based on a comment from last week.  That comment being, is today's price of cattle, similar to $8.00 corn for a corn farmer?  I believe the answer is yes.  A quick look at where corn prices were on the spot month in April of '22 shows a top at just above $8.00.  At the same time, the December of '25 corn could have been sold above $5.50 for a few weeks.  That was a $2.50 discount at the time.  Where is December of '25 today? $4.43, or $1.07 lower than contract high, and $3.57 from the $8.00 high.  So, when I recommended this trade, it produced a parameter for which would cost approximately less than 3% of the value of the contract with a top price less than $4.00 from current cash trade, $2.17 from contract high, and over $27.00 from contract low.   

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Feeder Cattle:  

Volatility is soaring.  Significant price swings in just the past 4 days of trading has kept everyone on their toes. As above, all profit margin is believed hinged upon an ever increasing price.  Cattlemen are believed entering into extenuating circumstances, in an attempt to continue to conduct business, for which outcomes are believed unknown. What we do know is that every dollar higher will help to incentivize others to find alternative means of supply, increase competitiveness between meat proteins, and decrease consumer demand. All of which are a function of higher prices and the attempts to curtail.  While some contend that consumer demand is strong, it is difficult to ascertain due to the manipulated low supplies being processed, and the significantly higher demand for the grind. All of the above leads me to believe that if you are going to continue to bid higher for incoming inventory, keep applying scotches under the wheels. My one and only excuse for the inability to pick a top is simply that, I do not know to what extent someone will risk capital, and livelihoods in the attempt to remain in the cattle business.  We know hogs went the way of consolidation and multiple other industries, with cotton standing out. The latest USDA National Agricultural Statistics Service numbers show 509 active cotton gins currently operating in the U.S. Back in 1980, that number stood at 2,254 gins and dropped to a little over 1,000 gins by 2000. “The number has continued to decline as consolidation has occurred,” explains Ashley.  We have a long row to hoe. 

Corn:

​Corn and wheat were soft with beans taking shorts to task after beating the longs down for weeks. There is not expected for much to transpire until after next Monday's report.  

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Energy/Bonds:

Energy mixed, but all were able to be plus on the day at some point.  Supplies remain unabundant, and barring further escalation in the middle-east, energy prices are anticipated to decline. Bonds were soft today as inflation/stagflation continues. Equities are having a difficult time finding footing.  

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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.