“Shootin’ The Bull”

by Christopher B Swift

4/17/2026

Live Cattle:

In my opinion, the cattle market is believed moving into equilibrium.  Rationing has caused significant shifts in domestic production and processing.  Enough so that it is believed going to be difficult to continue shifting without the loss of some production or processing capacity.  The closing of the Mexican border is reshaping US beef imports.  The closure has increased production and processing capabilities for which Mexico is now circumventing the border closure towards cattle, by simply shipping the beef across.   All the while, the Mexican cow herd is believed to have expanded as there isn't a lot for the bulls, cows, and heifers to do while waiting to either cross the border, or place into beef production.  China is believed circumventing US beef through Canada.  High prices tend to increase competition, with Canada and Mexico now believed benefiting greatly from the US cattle and beef markets.  There seems to be a lull in domestic beef demand for the moment that is causing some of the equilibrium.  The inability to push beef prices higher, while manipulating the slaughter lower, isn't a good sign for beef movement.  If we see more evidence of equilibrium, or simply stagnation in prices, a great deal of the projected negative margins may come to fruition, even if prices don't move lower.  Cattlemen stretched themselves a little further starting the week off, but as the projected negative margins grew worse, futures traders decided to let the cattlemen assume their own risk by swapping basis from negative to positive by over $22.00 in two trading days.  The combination of higher index reading, caused by cattlemen, and lower futures, caused by traders, helped to exaggerate the basis swing.  Observation of, the earlier in the week price structure of the board, led to multiple recommendations to achieve a minimum sale floor at or near historical high.  Most strategies would have allowed for several dollars higher were that to have been achieved.  Thursday and Friday's significant trade lower of futures spread basis sharply positive now, pushing the balance of risk back to the producer.

 

This week's price movement was record breaking in all weight categories. Not many found this week's events to be as interesting as others with only a fledgling increase of open interest, and that came on Wednesday, at the contract high.  So, some of the sharply lower trading on Thursday and Friday may be attributed to a lot of new longs at the top of the known market. Friday's price action did not disappoint in volatility and price expanse. I still don't know the reason for the price action, but it was wild all day long.  With this week's price action, whether the market has topped, or is still topping, will be the points of discussion going forward.  For the moment, the volume of selling on Thursday and Friday suggests some are going to head for the exit door.  As well, it may be that commercial cattle feeders are going to be more aggressive in their hedging programs due to width of projected negative margins. I thought that maybe last week's higher cash trade would pull the cattle feeder out of the red.  It did not, and I am not sure this week will either.  Now, the industry has two major sectors in the red with packers believed negative to the tune of over $220.00 per head and maybe another $100.00 or less per head loss to the cattle feeder.  To cap it all off, it appears the spread between all lighter weight categories and feeder cattle widened further.  

 

More inflation is anticipated with quantitative easing in full swing; checks supposedly handed out from the Tariff's, and commodity inflation still roaring, even if not as hot as two days ago.  The enormous price fluctuations in energy will take a lot of time to digest and begin lower on the retail side.  Retail prices will not come down nearly as quickly as what the futures can.  I anticipate the formation of huge sideways trading range to develop in the energy market with an upward bias.  Corn and soybean oil, both components of energy, sold off sharply when they reopened at 8:30am Friday, after the announcement of the Strait's being open.  By the close, most had come well off their lows, with beans getting plus on the day. Although the energy component may be fading some, planting hasn't even taken place yet with the entire growing season to go.  There is no shortage of price fluctuation that is going to take place the remainder of this year.  Bonds ended higher as the President is hellbent on trying to lower interest rates.  The quantitative easing is moving towards overdrive as government spending increases by the day. I anticipate grains to take a step forward in being a part of the commodity inflation. 

 

 

​Feeder Cattle:

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​Corn:

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Energy:​

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Bonds:

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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.

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