“Shootin’ The Bull”

by Christopher B. Swift

​6/16/2025

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Live Cattle:

Volatility continues to create an unstable environment for which cattle feeders have to contend with every day.  That would not be so bad were it not for the profit margin spread reflecting one of the widest potential swings from profit to loss I have ever seen.  Nonetheless, cattle feeders have few choices at the moment.  Basis and price risk continue with severe discounts of futures hampering the basis and immense escalation in the middle-east not anticipated to subside anytime soon.  It is difficult to get a reading on this past weekend's beef movement.  Weather in certain areas, riot's, looters, and protestor's in others, didn't give me the feeling a lot of grills were lit for T-bones & burgers.  I anticipate cattle feeders continuing to have to buy cattle, at what ever price, to remain in the cattle feeding business.  I anticipate consumers to contract further in discretionary spending leading to cattle feeders maintaining the brunt of risk.  

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It never leaves my mind that there are hundreds of thousands of cattle south of the border that could, at anytime, be available to the US.  My opinion alone, not having them here has, and will continue to, produce higher cattle prices and therefore, higher beef prices. As this appears the goal for a few, those who depend on this inventory are not perceived as in this group. 

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Feeder Cattle:

Over $7.50 was gained in the basis today alone.  The index down $3.21, and futures up $4.00 plus, helped a great deal of backgrounders today trade into the future at a significantly less discount than just the day before.  More inventory was marketed last week in the stocker and feeder cattle sectors than the previous.  With the video sales coming up, more inventory is expected to be made available to the market.  With the pork cutout higher, and boxes higher, consumers are going to have more difficult decisions to make on what meat protein they like and how much of it they can afford. 

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Corn:

​As the gains in crude faded, so to did corn.  Corn never did participate like beans or bean oil.  The simple explanation is that higher gasoline prices tends to curb consumer demand for.  Unlike industries or war, that "have to" have the product, consumers can choose to not go somewhere.  So, gasoline was impacted the least by the middle-east conflict and diesel fuel impacted the most. Even after the sell off, diesel fuel closed higher on the day.  Soybeans and soybean oil will continue to benefit from the increased government mandate on bio-diesel and with recommendations having been made prior to this event, participants are believed benefiting from. I anticipate beans to continue higher.  Wheat gave back some of Friday's gains as well.  I remain friendly wheat, but not necessarily bullish. 

Energy:

Energy opened sharply higher, and what turned out to be the high of the day, on Sunday evening.  As it sold off through the day, the range ended up being $7.66 August.  This is exceptional price width to contend with and a belief that more is to be expected. Futures traders of cattle seemed to disregard any further potential for conflict and began bidding futures higher in favor of cattlemen.  I am not as sure that cattlemen will be as quick to fade current developments.  Hence, today's futures trader narrowing basis for cattlemen is believed a bonus.   

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Bonds:

​Bonds were lower as higher energy is inflationary.  Interest rates are expected to stagnate, if not trend higher.  ​​

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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.