Copyright Barchart
“Shootin’ The Bull” by Christopher B Swift 10/28/2025 Live Cattle: In my opinion, when a market falls off a cliff, the next most probable move is an attempt to reclimb what was fallen from. Regardless of how many cattle or when, can be brought across the border, they wouldn't be in meat production until late in the spring, if not summer, of '26. Imported beef is expected to have more of an impact on fed steers than the reopening of the border. Importing beef will be of great help to reduce the pressure on processors on the grind, but not do much for steaks and roasts. Therefore, long way around the barn, but I think packers should own the at the money call options in February and April live cattle and sell the $15.00 out of the money put to reduce the premium paid for the call. This is a sales solicitation. As well, with winter coming on, I think the volatility is just getting started, and the ownership of inventory at the current discount may or may not be of great benefit. An increase of imports from Brazil might have more of an impact, due to a potential flooding of the market with cheap grinding meat, but until that is made known, I think there is a good opportunity to claw back some of the losses of futures. Regardless of what may take place going forward, the cattle feeder would be expected to move finished inventory sooner, to capture the basis, and not pay nearly as much for incoming inventory, to seek positive margins. Feeder Cattle: The cattle feeder will have to make some adjustments in bidding with the futures so dramatically lower. Cattle feeders are expected to use this enormous positive basis to their favor in locking in $40.00 to $60.00 discounts on incoming inventory this coming spring. Anything paid premium for this week will be scrutinized greatly knowing how quickly the tables can turn. When considering where the most expensive and cheapest prices to conduct business are, this should help you in making a more informed procurement and marketing decision. Hedged backgrounders are in a seemingly very beneficial basis spread. Unhedged backgrounders are urged to be overly cautious at the moment due to having to accept both price direction risk as well as basis risk. Nothing says feeder cattle won't trade under $300.00 before slowing down, or that the basis will be narrowed by tens of dollars. The Head & Shoulders pattern is still intact, but clearly the right neck line has had a stroke and drooping significantly. What this leads me to anticipate is that the right shoulder just doesn't come up as high as what the left shoulder is. Since I have no idea as to the extent of what can be done in reopening the border and how soon, consider that you may still need to be net short, were further advancements of imported cattle to made, but if things were to hit a snag, or delayed, the futures have a great deal of room to rally. So, how you participate in the potential formation of the right shoulder will be crucial. I recommend you only buy call options in the attempt to capture unrealized losses with the premium of the call option the risk you are willing to assume if prices do not move higher. If they do move higher, you may or may not be in a better position to prepare for what may come next. If they move lower, you will still be net short to a point and once the premium of the call option is depreciated, the short positions continue to offer benefit. If you need help, contact us. Corn: Grains and oilseeds ended higher, but sold off from the high. I anticipate another new high in corn and beans. I recommended today to market a few cash beans with the recent $.80 rally. I may be looking to exit previously recommended long positions were prices to make new highs above today. For the moment, I continue to anticipate a firmer trade. Energy: Energy was lower today. I anticipate energy to soften again. Diesel fuel was the biggest gainer of the rally and it was the lowest today. Bonds: Bonds were able to hold gains for the day. Tomorrow's release of the FOMC report may cause some fireworks, but expected to fizzle out pretty quick. I anticipate bonds to continue to move higher with expectations of a weakening employment sector and the persistent core inflation causing more of a recessionary environment than inflationary. “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.
