“Shootin’ The Bull”

by Christopher B Swift

7/06/2026

Live Cattle:​

The oscillator technical indicator is at the zero line.  This confirms the move from 6/4 to 6/22 is complete. The current move is currently lower, with expectations of moving towards $223.00 October.  This would push prices down to the lower end of a 6 month long sideways range. Producers are urged to consider that regardless of how wide basis may get, there is as much of a chance that cash falls to the levels of futures, as futures rise to the levels of cash.  As basis is horrible at the moment, for newly placed inventory, fixing an eroding price is believed the first step in managing risk.  The second part of converging basis may or may not provide any help to the producer. 

 

Cattle feeders profit margins dropped in half from one week to the next.  Projected negative margins were little changed.  Cattle feeders are going to be bidding on cattle in the video sales, and how much gumption they show for placing even more expensive feeder cattle is what the next basis spread move is expected to reflect. 

 

Cattle feeders have the ability to get a hefty jump on spring feeder cattle as the wide positive basis is over $30.00 in the spring contract months.  Cattle feeders have ways and means to address the wide basis spreads of feeder cattle to their favor when considering where to buy the cheapest inventory.  When considering a shift back towards carry in the feeder market over the next 12 months,  bear spreads should be given attention to. 

 

​​​​​Feeder Cattle: ​

​Backgrounders and producers will be marketing significant inventory the next few weeks.  If marketing within the video sales, buy the at the money August put and sell it the day the gavel slams on your load.  If marketing further, fix price as soon as possible with an at the money put option and see what opportunities may arise to help fix the basis.  

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If allowing for price to fluctuate freely, in an attempt to narrow the basis, recall that convergence can take place at any price level, suggesting there is no guarantee of cash remaining elevated, and futures having to climb to converge. 

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Cattle and corn remain at polar opposites, but some today started to reverse this.  How long will you wait to do something about fixing variable costs?  

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​​​​Corn:

​All were sharply higher today with beans leading the way. Coming off new lows from contract high in corn and wheat give them the appearance of a reversal.  Beans, having been the strongest in the decline are believed resuming their up trend.  As heavy of a short position as believed by the commodity funds, there is expected to be some follow through in buying. This year appears a long way from being over with yet. 

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Energy:​

The products were sharply higher today with crude soft.  Refining capacity is the ordeal and the draws on both gasoline and diesel fuel are expected to remain for a while.  Catching up to refill stocks will take some time.  Diesel fuel set a new high from its correction low and up $.11 on the day.  I continue to believe keeping farm tanks topped off and booking a portion of fall harvest needs won't be as bad as if you did not.  

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Bonds:

​Bonds are soft with a lot of funding going on this week with a healthy injection of pure liquidity in the form of Bill and Note sales held Tuesday and Thursday of this week.  Inflation is not expected to subside with the government fueling 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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