“Shootin’ The Bull”

by Christopher B Swift

5/12/2026

Live Cattle:

Today's market venue is not for the faint of heart.  Massive volatility and price expanse are expected to inflict heavy casualties in the cattle industry.  Traders have fled the live cattle market in droves the past 3 trading days.  With a widening basis spread, and potential reversal of price, producers will have their work cut out for them going forward. Cattlemen will be assuming more risk, simply due to widening positive basis spreads and need to manage the outstanding amount of working capital at stake. 

 

In my opinion, the relinquishing of tariffs on beef means something.  I don't think it was meant to be a hindrance to US cattle and beef production. I think it must have come from the consumer, food service, grocer's, or restaurants, as they would be the benefactors of such.  Unfortunately, attempting to help out one has seemingly cut the legs off at the knees for cattle producers and processors.  If or when a consumer, or retail outlet says, "I can't sell it, can't afford it, or can get it for less", is the start of a reversal. This is exactly what rationing is intended to do.  It spurs innovation (beef/dairy cross) and attracts competition (imports).  Whether the rationing has impacted consumer demand is questionable, but did create an obvious shift in beef product consumed.  All cattle demand starts at the center of the plate, and I think that is where major congestion is taking place.  The importation of more beef is believed to help clear some of the congestion.      

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​Feeder Cattle:

The fat/feeder spread is anticipated to come unwound. I anticipate both fats and feeders to decline, but with increasing costs for inputs outside the cattle, the feeders seem to be in the most jeopardy.  That leaves the backgrounder in a situation of having paid a higher price for incoming inventory, at a wider negative margin spread to the feeder cattle, suggesting a significant amount of working capital at stake. This is expected to only get worse as back month futures continue to move lower, and were already discount. ​

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Basis has fallen apart and traders are not expected to offer anything like the narrower time frame of two weeks ago.  So, you have your work cut out for you in how you will be managing the inherent price risk, as well as the basis risk assumed. There are ways to accomplish such if desired.  It takes living with the decisions you make, maybe or maybe not based upon my opinion, to fruition, regardless of hindsight. We look forward to helping you manage the risks you have assumed. 

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​​​​Corn:

Wheat blew the doors off today with a second gap up in a row and a limit higher move in KC.  Wheat is apparently in bad shape.  With the new high and position of the oscillator, I anticipate a target of $8.63 December KC wheat.  While only just above the old handle, both new crop corn and beans closed at a new handle today.  This leads me to anticipate further price action higher.  Beans are expected to be impacted by the meeting this week with China.  Beans and corn both are believed resuming up trends. ​​

 

Energy:​

​Energy has resumed its up trend.  All three are sharply higher as the military conflict is expected to escalate before subsides. With today's new contract high close in diesel, it projects an upside target of $5.33 June. I recommend topping off farm tanks and booking any fuel needed to wrap up planting and summer needs for dressings.  Harvest fuel in September and October have about a $.45 and $.55 discount to spot.  I do not know if your fuel provider will work off of futures prices, but if so, the discount to the back end may be of significant advantage.  If not, then potentially going hand to mouth may be the best way to capture any decline that may take place when in need.  Gasoline continues to move higher.  It appears from comments listened to that consumers are being impacted by the rise of gasoline prices.  However, not by as much to cancel already made plans, but to adjust for future ones. With today's CPI data out and red hot, that may change to.  

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Bonds:

​Bonds are lower.  I think they should be plummeting, but they appear to be held together as to not spook the equities market.  Bonds have resumed their down trend, but clearly taking their time about it. 

 

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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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