“Shootin’ The Bull”

by Christopher B Swift

6/26/2026

Live Cattle:​

In my opinion, price action was inconclusive as to pointing towards one direction or the other for the next most probable move.  Towards mid-week, it started to appear that cattlemen were much more bullish cattle than all other supporting sectors.  This led to widening basis spreads, caused by higher cash and lower futures.  Basis in fats is horrible, but manageable. A lot will depend on how quickly you fix a minimum sale floor with put options. Capital outlay hit a new high this week as historical prices were paid in multiple weight categories. This widened the starting feeder to finished fat spread by over $20.00 from June 16 to June 26.  Cattlemen are heaping on risk.   The balancing act continues with packers continually adjusting slaughter rates in the attempt to boost beef prices.  Cattle feeders are believed showing reserve, but for some, I believe the vertical integration has steepened to the point of "having" to meet the contractual obligation. 

 

Price advance of futures has been greatly beneficial towards producers, with the August contract having rallied $41.45 from June 4 to June 25.  That is a 12% price increase to converge the basis.  By Friday though, traders took more than $8.00 off Thursday's high.  Producers marketing into the video sales have an opportunity to fix a minimum sale floor for approximately 2.3% of the value of the contract. The slightly over $8.00 premium is not that egregious to producers, and easily absorbed in one or two of the daily price ranges. If executed, on the day the gavel slams on your load, exit the options position and add or subtract the premium.  It is that simple. 

 

Corn price is polar opposite of feeder cattle. Corn set a contract low this week and bounced from.  Further follow through is anticipated.  Cattle feeders have recently seen corn prices drop by $.73, 14%, in a very short time frame.  While there may be follow through, a "fall off a cliff" type chart pattern has the potential to see the bulls start the climb again.  A reduction in farmer selling, and funds short, could give the grain and oilseed markets a sharp boost of buying.  I recommend cattle feeders buy call options in the contract months needed for delivery, and at strike prices they no longer wish to pay for corn.   This same idea is towards pork, poultry, and aquaculture producers that use soymeal.  Both meal and corn are at prices believed advantageous towards producers. Energy continues to weaken.  Bonds moved higher this week, helping to produce a lower interest rate.  There is a pattern forming on the S&P mini futures that have my attention.  A Head and Shoulders pattern has all of the left side format with expectations of a right neck line to be created.  If materializes, it may influence producers as to consider how much more negative margins one can place cattle in and expect a return.

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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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