“Shootin’ The Bull”

by Christopher B Swift

​10/8/2025

Live Cattle:

Cattle feeders poured the risk on to themselves today, having paid historical highs to retain a seat at the table. Although some have varying revenue streams in the way the fat cattle are marketed, all have to start with similar feeder and feed ratio's at the onset of placing cattle. 

Lenders are going to have to support the cattle and grain markets for longer.  Government interference is expected to produce large quantities of unintended consequences as our trading partners, whether import or export, are circumventing the US in every way possible.  This leads me to expect further significant price expanse, up and down, and extreme volatility not yet seen. For grains farmers, it is a life support, but for livestock producers, it is for the ability to maintain hedges and future marketing parameters to ensure a minimum sale price is met. Minimum sale floors are believed beneficial to producers with the most recent extensive gains in value of product. Producers and processors will need more money to work from, due to less volume of product to work with.  The higher prices are simply the recognition of too much production and processing capabilities for the amount of product available. Lenders will be crucial in holding the finances together until either more inventory is made available, or capacity decreases. Due to the volatility of the current administration, either could come as quickly as the other. 

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Again, what is the protocol for when the screw fly is in US borders?  Why not address this before it takes place so preparations can be made?    

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Feeder Cattle:

Even though it may seem as backgrounders are making out like bandit's, on this historical price run, margins to them appear to be very tight.  While potentially not having negative margins at the onset, there is little room for wiggle.  The cattle feeder holds the key and until they contract in feeding capacity, or run prices to levels for which few can manage, it appears they will do whatever it takes, or in this case, pay whatever price it takes, to retain a seat at the table.  With new contract highs, and an extremely narrow basis to the spring months, backgrounders seem to have the ability to manage the risk with some profit potential able to be locked in with futures or options.  Like the cattle feeder, more money is going to be needed to help retain as much of the current value as can be with the use of derivatives.  Everyone this year has had a Master's Class education in hedging into a bull market.  While hindsight is 20/20, and some think foresight is as clear, simply the increasing value of the commodity will keep the need for more working capital from subsiding anytime soon.     

​Corn:

I recommend owning July corn with a sell stop to exit only at $4.28. This is a sales solicitation.  I recommend owning the at the money to $4.80 July corn calls.  This is a sales solicitation.  I recommend owning November '26 $12.00 soybean calls.  This is a sales solicitation.  The only reason for this recommendation on corn is to make sure you are not feeding any more expensive corn than you have to, for the most expensive cattle placed in history.  The soybeans is due to this years short US crop, maybe some issues with the beans behind wheat, South America still planting, and expected government interference.  

Energy:​

​Energy ended the day higher.  This still appears as a correction of the down move.  Nothing has turned the analysis back to bullish.  ​

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Bonds:

​Bonds ended the day pretty much unchanged after having traded higher and lower on the day.  The government shutdown, and tariff issues alienating the US from import/export trade, doesn't lead one to want to be overly aggressive in investing in such.  In my minds eye, I can see the two tiers more clearly with the upper end spending like there is no tomorrow and the lower tier cowering as to how they will meet next months bills.  Core inflation of insurance rates, on everything insurable, is what I hear the most complaints on.  ​

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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.