“Shootin’ The Bull”

by Christopher B Swift

​8/15/2025

Live Cattle:

In my opinion, the lack of a time line mentioned for the reopening of the border simply created a greater divide between Southern and Northern cattle feeders, currently pitted against one another in a battle for market share. The premium the north carries in fats over the south will be anticipated to produce further incentive to northern cattle feeders.  This turn of events is seemingly friendly towards the market due to no quick increase of inventory.  However, I have to wonder how much more friendly?  In my mind's eye, I foresee unfortunate conversations having to be made about whether one can continue to compete at current spreads of starting feeder/finished fat, as well as basis in the fat market. Were prices to begin softening, it would be anticipated that decisions are being made on pen space versus availability of cattle, or how deep of negative margins will have to be entered into to remain in the cattle feeding business.  Between tariff's limiting beef supplies, and border closures limiting cattle supplies, the woefully too much processing and production capacity is expected to go through great turmoil. I perceive this as a great disadvantage for more than is an advantage to some.  Lastly, it is possible that even with all of the above stated, consumer demand may shift with the higher prices and still dealing with inflating stagflation.  This week's lack of events leads me to not knowing what to do next just yet.  Therefore, I am going to stick with the recommendations to price protect what you can, with what is available, until I can see how cattle feeders are going to react into next week.  

Corn and beans were able to shake off an earlier in the week WASDE report to close firm on Friday.  With the corn crop huge, and unlikely to get much bigger, the goal will focused solely on demand to chew through this enormous crop.  For farmers needing to market corn, consider making cash sales on dates for which there is an expiring options on a futures contract. The reason for would be to sell call options at a price level you would be willing to sell cash corn.  Were the underlying futures to trade up to the level of the short call, you may or may not profit or be detriment by the short call, but you get to sell corn at the higher price.  The flip side is that were corn to not have met the level of the short call strike price, you earn the premium to help offset storage costs.  In theory, you are daring the market to come get you.  If it does, you have a higher cash sale.  If it does not, you collect the premium.  November of '26 beans continue to have my attention. I anticipate the price to move higher in a manner that suggests "buying acres" from corn.  As well, this year's shorter acres will reduce production, even with the higher yield. Energy and bonds ended the week softer.  The CPI and PPI reports continued to show stagflation, as well as inflation.  Bonds have moved back into the triangle it had broken out from.  Energy is believed resuming a fledgling down trend. 

“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.

​