“Shootin’ The Bull”

by Christopher B. Swift

​6/09/2025

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Live Cattle:

I believe evidence is starting to mount from the rationing.  It appears the volume of sales in stockers and feeders for the month of May was one of the lowest I have ever seen.  Whether this is from no more animals to go around, or inability to assume risks of placements, but fewer cattle were bought and the price paid, second only to today.  So, if the amount of inventory is about to shrink further, what will become of the enormous amount of production and processing capabilities at present?  If it is that cattlemen are no longer willing to assume the risk of placements, the industry will shrink in producers.  If it is that cattlemen don't have as much inventory to go around, the industry will shrink in production capacity. Either way, it appears the cattle industry has woefully too much production and processing capacity for the number of animals available to be produced and processed.  

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Consumers haven't seen anything yet as box prices continue to climb, and with fats higher last week, and potentially this, those box prices will be expected to climb further.  Futures traders were of no help today.  The slightly higher trade does literally nothing to help absorb a basis spread that is significantly backwards towards cattle feeders.  Nonetheless, cattle feeders and futures traders continue to fight for the remaining inventory as new highs in the index and futures were made today.  The industry is changing rapidly and going to spit out any producer unwilling to assume what appears to be a considerable percentage of unmanageable risk in feeding cattle. Rationing is in full swing.

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Feeder Cattle:

​Backgrounders have opportunities that few others do with futures traders willing to assume backgrounders risk with little to no discounts. Whether there are really fewer animals, or just fewer available to you, rationing will step down from the consumer to the cow/calf industry with expectations of a great need for expansion in the cow/calf sector.  Until then, expect more imported beef, fewer exports, further growth of the beef/dairy cross, and to some extent, lower consumer demand.  All of which are factors of rationing. In my opinion alone, and not to be confused with fact, but the next most probable move is believed a significant positive basis to form, leaving backgrounders in a similar position as are cattle feeders at present. 

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Corn:

All three were lower today.  The lower trade in beans has my attention in wanting to add to the current long November '25 soybeans with a sell stop to exit only at $10.10.  I recommend buying November '26 beans between $10.​55 and $10.50 with a sell stop to exit only at $10.23.  This is a sales solicitation.  The reason for adding to the long bean position with the November of '26 is due to aspects of beans buying acres for next year.  This year's lower acreage may or may not present problems into next year.  If not, more bean acres will still be anticipated over this year.  Were anything to hamper the '25 crop, it would give all the more reason for '26 to move higher.  As well, note meal is already starting come off the lows into the future, while still hammering out lows today.  Bean oil continues to be the bright light were biofuels to be impacted by the now rising energy prices.  ​

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Energy:

​Energy is higher today.  Energy is expected to continue higher.  Diesel continues to gain over gasoline.  I am unsure whether this is diesel demand or gasoline weakness.  Regardless, diesel is within a penny of making a new high from contract low.  With crude already surpassed, and closing at new highs, the breakout in energy is believed taking place. 

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Bonds:

​A weaker US dollar continues to suggest an inflationary environment. Bonds doing not much of anything, and rates stagnating at the higher levels suggests consumers are going to continue to feel impacts of inflation or stagflation.  I think commodity inflation is going to take place with some already trading today at historical levels.  Throw in a little energy inflation and consumers would be expected to shift uncomfortably in discretionary spending. ​​

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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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