“Shootin’ The Bull”

by Christopher B Swift

4/10/2026

Live Cattle:

In my opinion, the significant shift in basis, potentially new cash high, new contract highs for fats, and close proximity to in feeder cattle; producers are seemingly firing on all 8 cylinders this week. Unfortunately, most, if not all, are having to assume a wider margin at inception of production. The higher cash price this week is expected to present cattle feeders with a breakeven, as around the $250.00 area was the projected break even 5 to 6 months ago.  Beef is seemingly more difficult to move at higher prices, even with 7% less year over year.  As consumers are going to have to shift further in discretionary spending, I believe it will become more difficult to achieve a higher price for beef.  A major grocer this week advertised whole Ribeye for $8.99 per pound.  Grocers have been able to keep prices relatively steady, but restaurant prices continue to creep higher.  I'm seeing what looks to be the start of an inability to continue to push higher beef prices on to the consumer.  As manipulation has run rampant in slaughter and production, were a fundamental shift to materialize in beef demand; it is not known what the outcome would be for cattle. What we do know is that the starting margin spreads between feeders and fats is wide, with additional rises of input costs for which have yet to stop going up.  All this does is reflect how much higher the price for fat cattle needs to be in order to return input costs. 

 

The shift in basis from positive to negative has been one of the most beneficial factors to materialize in months.  In the fats, the ability to market at even, or only slight discount to today's cash market, and futures at contract highs, are extreme benefits to this shift for those that manage marketing and risk of potential adverse price fluctuation.  The feeder cattle futures did the same, but with mixed results.  To the backgrounder, it is the best shift that could have ever happened as traders are now willing to assume your risk at a premium.  However, the cattle feeder lost a huge advantage of the previous positive basis, where he could go out, not too far into the future, and buy futures at a steep discount to cash.  With all but the November contract at a premium, cattle feeders can't find anything for any less deep into the future.  Again, all this reflects is how much higher the fat price will have to be, and how narrower margins at the start. 

 

Outside of the cattle, input costs were a tad softer at the close this week, with corn about a dime lower and diesel fuel about $.50 lower.  Retail gasoline is a penny under $4.00 at my retail pump.  I anticipate diesel fuel to continue higher as military actions continue and 180 million acres of corn and soybeans planted in the next 60 days will keep diesel in high demand.  Refineries ran at 92% last week, up about a percent and about as high as I have seen refining capacity in years.  Of one thing to note, and keep a close eye on, stocks of crude are building at an alarming rate as oil continues to be pumped, but either backlogged due to the war, or lack of refining capacity.  The current situation could be reminiscent of crude in April of '20 when it went negative, due to so much production and not enough storage or refining capacity.   Drought is a significant issue at hand.  Drought could disrupt the fledgling turn of the cattle cycle.  Were more cattle to have to be placed this spring and early summer, the fall of the year would be packed with beef and start the next year still short of inventory. This same drought may have an impact on this year's growing season.  The chart pattern for beans is bullish, with bean oil the driver behind the beans.  Corn was able to push out of a 2 yearlong sideways trading range, consolidate above for a few weeks, but has since fallen back into the sideways range. I view this as a wave 1 and 2 with expectations of a wave 3 higher.  I have made recommendations through the week for cattle feeders to own the at the money December '26 and July '27 corn calls to fix the maximum price of feed costs.  Bonds continue to be weak, simply because inflation is high.  I believe bond prices will continue to move lower, making interest rates move higher.  Couple all of this with excessive government spending, and it appears inflation is not going to go down anytime soon.

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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