“Shootin’ The Bull”

by Christopher B Swift

​9/02/2025

Live Cattle:

There is little to discuss as the division grows between those who want, and or need the cattle from Mexico, to have enough inventory to be competitive, and those who do not want Mexican cattle in the US, for any reason, to further dominate competition. This leads me to believe that until resolve is seen from an increase of inventory, or decrease of production capacity, some cattlemen won't be able to participate, consumers will pay the price, and some will gain enormous market share.  The above leads me to maintain all hedges on every head placed on feed.  

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Feeder Cattle:

​A cattle squeeze for the century. A squeeze is as simple as attempting to outbid someone else for the desired inventory in the attempt to control a larger portion of available inventory than your competitor.  ​The north has a distinct advantage over the south in available inventory, cost of gain, and premium on fed steers.  This time frame we are in is expected to be a significant shift in cattle feeding production.  The unfortunate of a squeeze is that it can be broken in one of two ways.  One being an increase of inventory, for which only Mexican cattle can suffice in the short term of less than 9 months, while the other is a loss of demand, due to fewer able to participate at current capital requirements of production.  I recommend maintaining all hedges on cattle.  My main reason for remaining hedged, whether valid or not, is that most are wanting to bust the hedge now after having missed the past $30.00 to $60.00 in hopes of either making a few more dollars, that may or may not remain, or avoid the margin calls. A problem is not that the hedged cattle are losing money, it is that the price advance is so great that the capital to replace exceeds the sale proceeds for the next round of cattle.  ​

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​Corn:

​Corn has stopped going down for the moment.  This is not helping cattle feeders that feed in a traditional manner of buying feeder cattle, buying corn, and selling fats.  Farmers are believed to have marketed enough old crop, and borrowed enough against the new crop, to carry them through harvest.  There is also believed a shift taking place in managed money from short to maybe flat, or fledgling long.  Although I am not bullish corn, having met the "chip on the shoulder" level, I am not bearish either.  While a $4.50 December corn price may not be much elation to the farmer, it will be of significant detriment on cattle feeders that have projected lower cost of gains as their margin. Don't forget, the farmer is pushing the Trump administration hard to find more demand for US corn and beans.  A simple trade deal with China would go a long way in helping to move some corn.  

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Energy:​

​Energy was sharply higher today after a lower opening on Monday evening.  Diesel fuel led the way.  While the higher trade doesn't yet reverse the fledgling down trend, it doesn't help it much either.  At the moment, it is more stagflation in energy prices with the needle a little closer to inflation than deflation.

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Bonds:

​Bonds were lower today and exceeded the 8/1 low.  This pretty much just pushed bonds around the merry-go-round for the month.  With an expectation of an adjustment to Friday's Unemployment report, and the16th & 17th being the FOMC meeting, I anticipate bonds to move higher.  Today's lower trade pushed bonds deep into the triangle, but didn't quite reach the bottom.  I made the recommendation today to buy December bonds with a sell stop to exit only at 112'29.   This is a sales solicitation.  ​​​

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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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