“Shootin’ The Bull”

by Christopher B Swift

​12/01/2025

Live Cattle:

Cash is anticipated to find footing somewhere around last weeks trade at $220.00.  Whether north or south​ I anticipate cash trading to moderate into next year.  Most all of the commercial holiday buying is over with, leaving only the consumer left to decide retail movement.  Futures traders are expected to keep contract months hopping in both directions, but potentially confining movements into narrower ranges.  For the time being, until a new low is made under last weeks, I anticipate the cattle market and futures market to have found a bottom. With expectations of a sideways to slightly higher trade forming through the seasonal time frame of first of December to mid-February, convergence of basis will be expected as the key focus.  Were futures traders to push contract prices above or below cash to an extent that may become more difficult to converge in a particular time frame, then use those instances to adjust or initiate positions.  More than anything, expect significant volatility in a shrinking price range. 

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Feeder Cattle:

For a fleeting moment, one could have marketed feeder cattle, to be delivered in January, at a $5.00 plus premium to the CME index.  This basis swing has been over $35.00 in 5 trading days, including today.  This is about as abnormal as it gets and not expected to be repeated anytime soon.  Therefore, anticipate high volatility in a contracting price range.  With the Moore Research seasonality reflecting a higher trade from the first of December to the middle of February, it is possible that traders and cattle feeders keep trimming back bids and offers to a point where convergence of basis is taking place in a much narrower price range than seen the past few months.  

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For the longer term, it appears a correction of significance to the upside is possible as there is no increase in the number of cattle.  Eventually, it may come this spring that beef production and consumer demand are about equal enough that may keep the US beef herd from growing.  Recall that if producers put Ferdinand out with Bessie, it means more cattle.  More cattle is what sunk the 2015 market.  There is no expectations of an increase in cattle for 2026.  So, it may take a longer time frame to decipher the next most probable move of significance, leading to the potential creation of a large sideways trading range to mark time until producers are more set in their production practices going forward. 

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​Corn:

For those not privy to the mid-day cattle comments, here is the one I sent out Sunday evening to subscribers. If you wish to receive this timely information, contact Shawn Gammon to be placed on a 30 day trial, or $300.00 annually to subscribe.   

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I recommend selling soybeans and corn.  This is a sales solicitation.  I continue to read from multiple sources, and hear from many more, that state there is an abundance of grains and oilseeds to be marketed into 2026, with new crop South American acres going to increase. Farmers may or may not have ownership, and many are looking to "re-own" the crop.  In my opinion, the banks own the crop whether they know it or not.  At the moment, whether you decide to be short or not, do not pay the premium of futures, enormous negative basis, after a one dollar plus rally in front end and eighty cents back end from mid-October to present to re-own your soybean crop.  Instead, if you have sold it, whether higher or lower, either don't do anything, or look to own at the money puts on March through July corn and beans, or market the 2026 new crop of both using an options strategy.  Yes, this is an absolute reversal of what I have been thinking and the wall of worry that grains may have been climbing.  Between the demand fundamentals being greatly based upon forcing or "influencing" China to buy more US grains and oilseeds, with administrative attention sluggish towards renewable fuel, and negative supply issues, coupled with increasing South American production, I don't see much that is bullish.  The wall of worry may well have been funds positioning themselves for either further Chinese purchases, that now seem shady, or maybe Trumps desire to stimulate that could push more liquidity into the markets.  Regardless, the price of corn only moved $30 to $.40 higher from the August low in an overlapping 3 wave move.  The beans up a dollar plus in March and about eighty cents in November since mid-October.  So, beans and meal have had a significant move higher and oil just seemingly sitting there.  Recall that hog production is expected to stagnate in the US well into 2026 and expected to decline slightly in China, due to such efficient means of hotel like production.  This $50.00 rally in bean meal could be a bonus to crushers and means to market what may be a glutenous oilseed crop in the bins and in the ground. 

 

Soybeans and corn have become an integral part of US fuel sources under the guise of renewable fuel.  Crude oil has been in a bear market since 2022 and hovering currently at what is believed significant support at just under $60.00.  The President has made it as clear to the energy industries, as he did to the cattle and beef, that he wishes for prices to be lower.  So, I have to believe him.  Because of the President's desires to lower energy costs to consumers, and having to use tactics to sway China to buy more US corn and soybeans, these two factors appear conflicting greatly.  How can you move energy prices lower and not impact renewable fuels that are a significant part of US soybean and corn demand?  I don't know either, but it does not appear to be bullish. 

 

Technically, the soybean market may have produced a false breakout from a long-term sideways trading range. This rally would be anticipated to unfold in a 5 wave pattern and may or may not have already been completed.  If a false breakout, it would lead me to anticipate a new contract low.  In the corn, the pattern appears a common A,B,C zig-zag, leading one to believe this is a correction and marking time.  For the moment, corn may be the most definitive sooner than beans since the price ranges are so much lower.  A trade of July corn above $4.70 &1/4 may suggest to anticipate further upside potential, but below $4.48&1/4 would lead me to anticipate the resumption of a down trend.  Beans have a small head and shoulders pattern, but a new high would not surprise me either.  I recommend you consider these factors facing corn and beans, where you are positioned in cash or futures, and how you may want to proceed were this analysis to prove correct in the anticipation of potentially a new contract low price move in both corn and beans. If prices continue higher, I think it will be due to anticipation of increased Chinese purchases or some weather related issues with South America. Neither appear of much concern for the moment.  

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Energy:​

Energy was firmer on the day. Crude oil appears to be just marking time and were a peace deal made between Russia and the Ukraine, I would anticipate a quick $10.00 to be taken off crude oil.  If no deal, then episodes like the past two weeks may remain until such time.  That being, spikes in diesel fuel.  

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Bonds:

Bonds were sharply lower.  Japan's bond prices are plummeting, creating a very high rate of interest for its citizens, and headaches for every country that owns them at higher prices and lower rates of return.  Japan is also the largest holder of US debt outside of Peter and Paul (the US government). As multiple assets and asset derivatives are owned and traded throughout the world, it would not be uncommon for an issue in one country to impact another.  Our President may be able to do a great deal, but he is not in control of other countries or what the investors of could do.  Seemingly, this issue has been an impact on the made up derivative bitcoin. Even though I've never seen one, or held one, or even thought I had seen a glimpse of one, many people have invested government backed currency and put up collateral of tangible items to own something that has no government backing or to anyone's real knowledge, even exists. Someone created an idea, similar to, "what if I could make statements look so real, reflecting returns that are so questionable, that people wanted to assume large amounts of risk to participate in."  I'm pretty sure that is what Bernie Madoff did.  Long way around the barn, but the 2008 housing crash exposed Bernie's scheme.  Japan's undoing may well expose schemes or frailties of markets no one expected. 

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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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