“Shootin’ The Bull”

End of Day Market Recap

by Christopher B. Swift

​4/8/2025

Live Cattle:

If you think it couldn't have gotten worse, it did.  Cattle feeders saw the spread between starting feeder and finished fat widen to another historical width today.  On top of that, corn was higher and interest rates are sharply higher over a 2 day time frame, and diesel fuel about three cents lower today.  ​Some quick math suggests that cost of gain must be at $.46 per pound if growing to 1,450# slaughter weight.  At 1,600# slaughter weight, it goes to $.75 per pound to return the price of the feeder steer and at 1,800# slaughter weight, a cattle feeder will need a cost of gain of $.99 to break even.  Consumers are believed going to experience higher inflation going forward for which only cattle/beef prices are an inflated commodity they will have to contend with.  Grocers are expected to pass a large portion of the increase in box price to the consumer.  Another large restaurant chain advertised their 2 meals for the price of 1 on a TV commercial last night.  Coupled with this, the lower restaurant index for March, and no leeway in eating margin on beef purchases, suggests restaurants are tightening their belts in preparation of shifts in consumer demand.  Packers continue to cut the slaughter pace in order to keep beef prices high and continue to back cattle up.  At some point, the cattle feeder will have to do something on his own to help tilt the balance somehow back to their favor.  Note that profits today are due to having paid an over $40.00 lower feeder cattle price than today and a cash fat price of over $214.00, nowhere to be found in the near future.  As well, those profits began to lessen slightly last week as each week, a higher price was paid for incoming inventory.  With no higher fat cattle trading, the current profits will dwindle to deep losses in less than 4 weeks.  ​​

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Take note of any short call options positions you placed on the way up.  If those short call options positions have lost more than half of what you sold them for, consider buying them back and selling an out of the money put at a strike price that will pay you the same premium as you gave up.  You will accomplishing a few things.  One will be a reduction in margin as the short call is margined the same as a futures contract.  Two, you will have swapped where and who assumes your risk.  That being, once or if the underlying futures exceeds the short put strike price, your position goes flat and you begin to assume any further downside risk.  The flip side is that by exiting the short call, you have the top side wide open again.  Pay attention to your account as the deep positive basis spreads is believed an opportunity to adjust things you didn't like when trading higher.  This is a sales solicitation.  

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Feeder Cattle:  

The plight of the cattle feeder should be on the mind of every cattleman there is.  They are assuming tremendous risk of adverse price fluctuation, the most working capital ever devoted to producing a pound of beef, and at a time when it appears the consumers resilience is about to be tested again. I've been reading from some other analysts that there are troubles with secondary food brokers.  I expect, with little reservation, that the tariff issues, sharp decline in equity share prices, and now sharply higher interest rates, will expose some well hidden problems many have been able to conceal through the high meat prices.  ​With equities having closed at a new lows, bonds continuing to sell off, and cattlemen owning the most expensive inventory in history, consider your plight and do something about it. 

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Corn:

​ Corn was higher today.  It is dry in the western portion of the corn belt, and sopping wet in all of the southeast, leaves few acres in a prime spring planting condition.  Corn was higher and I still don't know why.  It has been mentioned the large fund position in corn.  Regardless, I want to be long corn because it is cheap and feeder cattle are expensive.  ​

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Energy/Bonds:

Energy ended the day sharply lower.  Like multiple other commodities, traders tried to reverse the selling, but there is a force behind the selling and they are obviously not through yet. 

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Bonds were sharply lower today, after a sharply lower trade Monday.  I suspect this to be hate selling by the Chinese in retaliation for the increase in tariffs. China holds a sizable position in US debt as they have been gracious to loan the US money. Well, now they are selling the debt back and it is causing retail interest rates to soar.  New car, washing machine, boat or cow, if bought on credit, it will cost more. 

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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.