“Shootin’ The Bull”

by Christopher B Swift

5/27/2026

Live Cattle:

Lower cash bids and higher futures helped to converge basis quickly today.  The October got to within $.80 of the high made in February.  With this price level being significant, as in relation to a believed forming head and shoulders pattern, you have some considerations to make. I can be wrong two ways now.  If wrong, and prices move sharply higher or to new highs, participants will have skirted another time frame of doubt.  If wrong, and prices move sharply lower, there won't be another opportunity to market at current levels.  What I don't anticipate is for prices to remain in this range for much longer. So, while the price is within spitting distance of the February high, and no one seemingly liked it when prices moved lower, as evident by the massive loss of open interest, consider this an opportunity that wasn't available yesterday, and especially if you didn't take advantage of it when even higher.  

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​​​​Feeder Cattle: ​

As above, a lower index reading, and higher futures, narrowed basis by over $10.00 today.  Most contract months came close to the gap and all made at or a little better than a 50% retracement from the 5/20 high to the 5/22 low.  Unlike the fats, feeder prices remain well under the February highs of what could be a left shoulder. Considering moves of $20.00 to $50.00 being somewhat normal as of recent, today's rally offered producers some leeway in how they wish to manage the potential for adverse price fluctuation.  Whether marketing in the summer video sales, that won't allow for convergence of basis, or fall months, consider buying the at the money put now and not doing anything else until the next $10.00 to $15.00 move takes place, whether higher or lower.  Then if cash has remained stable and basis converged with futures, you are only out the premium paid.  If prices move higher, I would recommend selling calls $20.00 out of the money.  This would lower the premium paid for the put option and produce a ceiling for which no further profit potential would be available, above the short call strike price.  If moves lower, then sell the $20.00 out of the money put and form a bear put spread for which the spread between the two strikes is profit potential minus the premium. 

 

Feeder cattle are believed to have reversed.  While traders may be able to run futures up and down the price scale already established, I think a brand new set of bullish fundamentals would have to arise before cattle feeders would subject themselves to even worse projected negative margins than at present. The unfortunate is that price did not encourage production from the cow/calf producer and has now left untold numbers of backgrounders and grazers without inventory to work with. I do not know how far producers will chase inventory, and especially with thoughts that this years video volumes will be lower.  With the spreads already having turned in the long feeder/short fat, and cattle feeders not seemingly as anxious to pile in $400.00 per head losers at the start, backgrounders are urged to lay off risk of newly acquired inventory as basis and price improves. How much more it improves is believed somewhere within $3.00 to $5.00 of today's high.

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​​​​Corn:

A softer day, but not anything to write home about.  I recommended buying December KC wheat today with a sell stop to exit only at $6.86.  Other than this, the grain and oilseed market is quite. ​

 

Energy:​

​Energy continues to soften.  Whether reversed or not is yet to be seen.  I don't think it has, but I do realize that if a deal is struck, prices will be anticipated to be sharply lower.  For the time being though, diesel fuel is about $.58 off it's contract high and if you were privy to that decline in retail fuel, I recommend topping off the farm tanks again. 

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Bonds:

​Bonds and notes continue higher.  Government spending is huge and the government does not want to address inflation by raising rates.  So, anticipate more inflation for two reasons, one it is being fanned, and two, no one is doing anything about it. So, inflation is expected to continue to increase in both core and commodity. 

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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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