“Shootin’ The Bull”

by Christopher B. Swift

​6/11/2025

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Live Cattle:

The curtains cattle feeders are producing behind have become more like shear drapes than curtains.  Everyone can see the predicament of making record profits today and projected losses just 150 days from now.  Today's spread between the FC index and October fats continues to trade at the tip top of the spread range.  At today's high, even though the 3rd highest, it is only a fraction from the 2nd highest.  There is little way to produce a creative hedge that would be of more benefit than exposing you to more risk than already.  An at the money put option remains as a way to manage what risk that can be while leaving the basis spread  unmanageable. 

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Feeder Cattle:

Cattle feeders remain in an untenable position with basis spreads in fats, paying top dollar for replacement inventory, and assuming risks for which most are in awe of.  Cattle feeders are believed to have 3 ways to mitigate the current environment.  One, bid less for feeder cattle, two, have fewer bidders for feeder cattle, or three, rely on the price of beef and fats to remain elevated, and hopefully continuing to rise.  Two out of three of these seem the most likely.  

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Corn:

The grains showed little response to the trade deals between China and the US.  As energy is moving higher, and now confirmed in an up trend, ethanol and bio-diesel are expected to be put front and center again for corn and bean demand.  ​

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I recommend owning November of '25 and November of '26 soybeans, and recommend owning December Chicago wheat.  These are sales solicitations. 

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Energy:

​Energy is sharply higher.  With gasoline now at a new high from contract low, all three are in a fledgling bull market.  Further unrest in the middle-east, and Iran rattling sabers again, energy traders are not taking this lightly. I recommend you do not either.  This morning showed energy having been down in the month of May via the CPI report.  That is gone now with crude trading $3.00 over the May high.  As well, August is within $2.50 of the April high, above $70.00.  A close of the weekly continuation above $69.36 will surpass all resistance up to the next level at $77.88 weekly close only.  Consumers are expected to have to make further decisions on how their discretionary dollars are spent with higher energy prices. 

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Bonds:

Bonds are higher.  The CPI was higher, but not as high as expected, therefore, the higher bond price.  The World Bank posted this week they adjusted US growth to under 2% going forward.  At the moment, I think stagflation is what to expect over an increase or decrease in. ​​

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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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