“Shootin’ The Bull”

by Christopher B Swift

​8/25/2025

Live Cattle:

A great deal of volatility had to be contended with today.  A sharply lower opening turned into a not nearly as low of a close.  Traders hashed out what a human with a screw fly in them or on them may or may not do to the cattle market, with knowledge of by some before released to the many.  As with most instances in question, the market reacted sharply to what could have been.  By the close, the focus appears to have shifted back towards supply issues.  With last week's sharp rally in the live cattle futures, it helped to push projected margins into the black.  I continue to take the segregation of cattle feeders between those in and outside of vertical integration to heart.  While there is not much that can be done about this, for those outside of VI, having to participate in a market where market share is going to be obtained, the use of futures and or options is expected to help, but may not produce the ability to compete.  Other than this, competition for market share, or length's one will go to remain in the cattle business, will continue to be explored.   

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Feeder Cattle:

For all of the hullaballoo and price expanse seen today, cattle feeders saw few changes at the end of the day.  Backgrounders had to contend with a great deal of price expanse, but considering how much has been gained, even at limit down, most of last weeks gains were still available.  Not only that, the majority of the price expanse took place within the first 5 minutes of trading, with more time spent trading higher off the bottom than lower from the top.  With the price advance nearly vertical from the July 2nd low, and now over 20% higher, I recommend you own the at the money put option on every head of newly purchased inventory to March.  This is a sales solicitation.  The 3% to 5% cost of an option premium to the value of the contract appears as a very definitive means for capturing the extensive gains and helping to mitigate potential adverse price fluctuation for which no one anticipates. If able to continue to margin from working capital, then the fence options spread will help to reduce the initial premium, produce unlimited margin requirements, and allow for a predetermined amount higher, were further price advance achieved.  Backgrounders are urged to keep in mind the segregation of cattle feeders in and outside of VI.  It is this current circumstance of attempting to garner market share as the fuel for this rally.  My belief is that your rally is dependent upon both sides able to continue to compete at any price.  ​

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​Corn:

​Feed and feedstuff's may be plentiful, but they are far from getting cheaper.  Harvest may help when bringing in new supplies, but seemingly a lot of corn has been priced, and the Trump administration is under pressure to bring demand to the corn and bean market.  Although I am not bullish corn, I am not bearish either.  I anticipate beans to trade higher.  

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Energy:​

Energy was higher today.  I was expecting a lower trade in energy.  Nonetheless, I continue to believe this rally to be a correction of the initial move down.  I am unable to get bullish energy just yet.    

Bonds:

​With bonds lower today, the cattle feeder saw expenses rise for everything needed but the cattle, and they weren't down that much.  So, the higher rates are still lingering and with new home sales higher last month, the discrepancies for lowering rates continues.  Bonds remain in their triangle with expectations of moving higher, out of the triangle.  ​​

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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.