“Shootin’ The Bull”TM

by Christopher B Swift

8/12/2026

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​Live Cattle:

Lines in the sand were believed crossed this morning as selling picked up sharply after the lower opening.  The selling persisted through the day, suggesting to anticipate more.  I think today's lower trade is simply more recognition of the transition of fundamentals taking place. Futures traders are, and have been, taking the lead in selling cattle off.  The widening of the basis spread increases the risks of unhedged producers.  When combined with the higher input costs of feed and fuel, there is no shortage of adversity to overcome. 

 

Keeping a bad situation from getting worse is a goal now.  To achieve this goal, buying 2 at the money put options will produce a 100% Delta at inception. To work on the goal would be to buy 1 at the money put option with a 50% Delta. Price improvement for fats would come with a sharp reversal of fuel and food prices to shift consumers back into a greater spending habit. Packers and producers continue to lose money.  Projected margins are no better, and actually will be expected to worsen further by weeks' end. 

 

Feeder Cattle:

The rally in the feeder cattle was significantly weaker than that of the fats.  Feeder cattle are expected to move lower than fats because the projected margins at inception are horrible.  Higher feed and fuel will have more impact on the negative margins.  Feeder cattle are believed to have resumed their down trend today.  The exceeding of last Friday's low leaves only one more support area at the 7/28 low of $323.27 October.  Below that would suggest a downside target of contract low, per respective contract month, to be met. 

 

The oscillator has started to turn lower on the daily chart without having traded above the zero line.  I think this opens a can of worms.  That being, if new lows in price are made, but not a new low of the oscillator, it may bring the bottom closer.  If new lows in price and oscillator are made, it will be follow through with expectations of new contract lows.  The close only chart shows closing support of October to be $325.25.  A close under that and the resumption of the down trend is confirmed.  It will most likely take the oscillator longer to form its patten than price to go down, so this is expected to be realized over the next several days of trading.  

 

As above, keeping a bad situation from getting worse is a goal.  To achieve this goal, buying 2 at the money put options will produce a 100% Delta at inception. To work on the goal would be to buy 1 at the money put option with a 50% Delta. Price recovery of futures is as simple as narrowing the basis.  The problem at hand is that traders are in no fear of widening it, at already wide spread levels.  October has been between $29.00 and $31.00 positive when at the widest widths since March.  Basis closed today at $24.97 if index prints at $355.37 estimate today.  

 

Corn:

And just like that, corn is higher.  Corn closed back out of the sideways range and is believed to be at the onset of going to a new contract high. Wheat shot higher and especially KC.  This is anticipated to continue due to military actions disabling Russian grain ports, this year's poor crop, and within 6 weeks of planting wheat in the dust.  When overlaying the acreage maps of wheat, with the drought index, the entire HRW region is in a drought, if not severe.  Wheat is anticipated to make new contract highs and KC wheat is expected to outperform Chicago.  Soybeans brought up the rear.  They had a phenomenal rally upon the release, but gave all back as the news was pretty neutral towards beans in comparison to corn and wheat.  Bean oil continued higher with even meal a touch higher as well.  Pork and poultry producers are urged to secure meal needs going forward.  Buying the at the money calls gives you the right, but not the obligation to own meal or corn at a price you no longer wish to pay for it.  There is significant risk of sharply higher feed costs. Don't be lax in fixing some variable prices that can be done, so very easily.   

 

Energy - Bonds:

Diesel made new contract highs today.  Gasoline was next and crude, bringing up the rear. Energy is expected to move higher as military actions continue, the harvest of 180 million acres of crops in wait, and limited refining capacity. Refining capacity dropped again this week. Stocks remain at exceptionally low levels.  The Dow Jones Commodity index is on the verge of resuming its' up trend.  It is weighted equally of 1/3 energy, 1/3 grains/meats, and 1/3 metals.  With energy already in major up trends and metals finding a bottom, were grains and oilseeds to move higher; I don't think it would be difficult to move the index to a new high.  The CPI showed a one tenth of one percent decline.  Silly me, I didn't even notice it when I went to the grocery.  Fuel and food are elevated and expected to remain that way.  Inflation of daily needs is expected to keep consumers from shifting into a higher spending mode. With growing drought in areas of the US, the super El Nino potentially impacting world production, and energy prices soaring, there is no shortage of risk to manage.  Do not become lax in your management of.    

     

Charts by ICE:

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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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