“Shootin’ The Bull”

by Christopher B. Swift

​6/23/2025

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Live Cattle:

For all that took place over the weekend, not much changed in the world of cattle.  Cattle feeders watched spreads worsen further between starting feeder and finished fat today.  Current profit margins and projected losses didn't change much from week to week.  It will take a sharply higher cash cattle price, or sharply lower feeder cattle price to reverse what appears as a worsening spread.  Until then, the current spread between the feeder cattle index and December futures widened further today with expectations of a wider spread width above $106.47.  This function is simply the feeder cattle index not moving much lower and fat cattle futures moving sharply lower.  With the video sales just around the corner, and an increase of inventory to be marketed, it will be more than interesting to see how they price incoming inventory this summer, usually for fall placements, at such a wide spread between starting feeder and finished fat. 

Of interest is the now 33 months of cattle on feed over 11 million head, weights that are expected to be burdensome on animals in the extreme heat, and consumers more likely to seek out something cool during the heat than something hot. 

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Feeder Cattle:

​Bear spreads in feeder cattle are expected to be favorable.  Cattle feeders looking to buy feeder cattle cheaper in the back months, and backgrounders seeking the highest marketing price today, will find quite the spread between the remainder of this years contract months and next springs. There is not a great deal to discuss on feeder cattle as the price direction is squarely on the shoulders of the cattle feeder and their ability to manage stupendous gains today and projected losses of around $200.00 just 150 days from now.  With what may be equal to, or less than 3% of, last year's video sale inventory a few days away, backgrounders are going to see what kind of appetite the cattle feeder still has at historical prices, spreads, profit margins, and more availability of inventory to work with.  ​

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​Corn:

​All were lower to sharply lower.  With energy soft, so to are corn and beans.  Corn is more likely than not weather, the increased acres, and some heat finally going to dry a few areas out.  Wheat looks like it just made a correction, along with beans.  Both of these continue to have more supportive underlying features than corn. December corn broke through the line in the sand at $4.34.  I can't make much of an argument for a rally of significance in corn, and with the sideways trading having been broken to the downside, the corn market needs everything it can get to keep from causing farmers to capitulate new crop sales.  I recommend maintaining long positions in beans and will be looking for a place to buy wheat.  

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Energy:

Futures traders were dealing with more pressing matters than suppling cattle feeders with a narrower basis today.  Energy prices have moved $10.00 in less than 24 hours with $5.00 higher and $5.00 lower on the day.  This volatility is not expected to subside, although, it appears that Iran produced some retaliatory strikes, for which appear insignificant at the moment. Nonetheless, not knowing what the Biden administration let in here, unvetted, and from unknown origin, there is no telling what may happen next.  Although any retribution by Iran towards the US would most likely be minor, any terrorism act within the US, that would restrict consumer movement, could have a large impact on certain commodities, and a significant impact on the economy. 

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Bonds:

​Bonds were a little higher on the day.  Why, I have no idea.  ​​Two of the Fed's presidents are softening on lowering rates.  Were the President to get his wish of lower rates, expect another round of inflation to materialize.  

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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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