“Shootin’ The Bull”

by Christopher B Swift

4/29/2026

Live Cattle:

Significant divergence is taking place in all sectors.  Ground beef demand hit a record level, as shown by Dr. Derrell Peel this afternoon.  This demand is due to cost of cuts, leading to fewer cuts purchased. Ground beef and cuts are diverging further. Boxes were lower at midday and cattle prices were sharply higher.  The June and August fat cattle futures were able to hold above their 2/19 high when made their 4/23 low.  None of the feeder cattle market held above the 2/19 high.  Spreads between feeders and fats has narrowed slightly, but even with the improvement, the projected margins remain at levels being currently traded.  This suggests the higher price has to stay around for much longer.  Lastly, the new contract highs being made on the fats is not being followed by new highs in technical indicators.  

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Interest became exceedingly apparent the past two days with an increase of open interest in the fats of over 13,000 contracts and lower in the feeders.  More divergence.  New longs own the top of the market and new shorts have marketed at historical price levels to date. All of the above leads me to believe the producer and processor are stretched even thinner in margins, leading to the idea the ice is getting a little thinner. 

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Price action in both cash and futures exposes the shortened supply, but everyone already knows this.  I continue to believe that marketing into the fall of the year will be of great benefit, even at the discounts, as these current contract highs may, or may not be, the best price available going forward. 

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​Feeder Cattle:

Feeder cattle futures have not made a new contract high, yet.  The weekly high continues to stand above $381.00 from October of '25.  Fat cattle is where the squeeze is, but there is no squeeze in feeder cattle because cattle feeders don't want to reload at historic highs.  Hence, keeping more risk on to the backgrounder to grow them longer before being placed on feed.  As backgrounders have continually widened projected negative margins, starting at the first of the year, the risk assumed is accruing. 

 

There are multiple abnormalities taking place within the industry that are expected to continue to reshape it.  First and foremost is the doubt that the cattle herd will ever expand to levels of current production capacity.  I think the higher prices have encouraged competition and shifted production times that will continue to impact US beef and cattle prices.  The shortage encouraged the longer growing time frames for fats, heavier starting and finished weights, and significant shift of the consumer to the grind. Price gains, that tend to encourage more production, have fallen short of producing incentive.  The high price has encouraged the dairy industry to get involved in beef production, to a point now of approximately 20% of cattle on feed have a dairy influence.  Mexico is circumventing the US border closure by simply producing and processing their own cattle and shipping the beef to the US.  China is circumventing the US by buying Canadian beef, which in some respects is just US cattle shipped across the border.  Brazil and Argentina have twice as many cattle as we do and there is no doubt in my mind they are working every day to find a way to bring beef cuts into the US and be sold side by side with US beef.  Labeled a product of Argentina, Brazil, Paraguay, or Uruguay, and sitting right next to the same cut labeled "Product of the USA".  Consumers will have a choice because the price of US cattle and beef are so high, that others can undercut the product for a profit.  What are US Miller's doing today to offset the higher cost of US wheat? They are shipping it in from Poland.  Most of the above you can read in your old business class books.  High prices encourages production and rations supplies until can be replenished.  These are factors at play right now that are anticipated to impact the best laid plans for a continual higher price for cattle. All the while producers are believed extending themselves further into deeper negative projected margins, or are running operations on limited utilization of the capacity available.   

 

​​Corn:

​Corn and beans were higher.  Wheat was mixed with Chicago a tad weak on the close and KC a tad firm.  Both made new highs from contract low today.  All are anticipated to move higher.  December corn made a new high from contract low and came to within a half a cent of the $5.00 level.  It may take a few days to punch through, but I anticipate corn to trade higher.  These are fledgling bull markets that are just now starting to form a trend.  If having to market into this, prices are well off the start of the year lows.  If having to procure feed into this rally, at the money call options will solidify a maximum price at a level you no longer wish to pay.  

 

Energy:​

Energy blew the doors off today with crude now trading above $100.00 per barrel and diesel fuel above $4.00 per gallon.  Not to be left out, gasoline made more new contract highs today.  This leads me to anticipate a sharp rise in retail pump prices to the consumer. With a sizable ground force in position, and nothing having changed, I anticipate further escalation of the military actions in the middle-east.  Looking at back month discounts, everyone pretty much knows that there is no shortage of oil, just the movement of and military actions in major oil producing regions.  There is as much as a $30.00 discount to the back end, and were, or if, the military actions subside, these current contract highs, at steep discounts, may be the highest price able to be achieved before expiration of the contract.  I also believe there are hundreds of traders tasked with marketing millions of barrels of oil, deep into the future, when or if the tide turns.  Keep this in mind when viewing the back end of the cattle market, what prices are available, and how you can lock in what may be the highest price achieved for the life of contract, even at unattractive discounts.    

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Bonds:

Bonds were lower and the Fed kept rates unchanged.  Bonds are believed resuming a previous down trend.  A close under 112'06 June bonds will be a new low close and help to confirm the down trend has resumed.  Today's price action suggests to anticipate higher interest rates.  If there were some way to convert or lock in a time frame on adjustable or revolving debt, I recommend you consider doing such.  

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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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