“Shootin’ The Bull”

End of Day Market Recap

by Christopher B. Swift

​4/22/2025

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Live Cattle:

Most anything stated today will simply be beating the same dead horse.  Cattleman are weeding out the weak with prices tempting some to exit the business while on top. Margins are tight in every sector with suspect that today's fat cattle profits are merely being invested 100% into newly acquired inventory.  Futures traders appear to have no desire to bid futures to levels of cash until much closer to expiration.  I have no idea what will be the catalyst for the next most probable move, or in which direction.  What I do know is that every sector is having to manipulate production in some manner, with expectations that not everyone can manage the amount of working capital it takes to produce a pound of beef.  

Feeder Cattle:  

No difference here.  With a perception that there is significantly more backgrounding facilities than feed yards, and fewer cattle for a sector in which volume has always been available, there is woefully too much production capacity for the number of animals.  The conclusion is that not everyone will be able to manage historical capital outlay on reduced volume of production.  With no signs or signals of expansion, it could be 2 years or more before any noticeable increase of inventory is seen. I recommend you attempt to figure out how you will manage to compete with fewer animals, higher priced ones, and the risk of adverse price fluctuation, as there doesn't seem to be any middle ground.    

Corn:

Corn was soft.  I anticipate corn to move higher.  For corn farmers, I recommend buying call options in December corn at strike levels you would market physical product were those price levels achieved.  This is a sales solicitation.  By spacing them apart, as those strikes are met, lay off new crop sales and you are still long the market.  What this does not do is offer any form of downside protection or pricing.  As well, if nothing happens, you will still have to write off the loss of the call option premium paid.  This recommendation is to offer you a way to market your cash crop at higher levels with any expectations of a higher price achieved by the long call options.  ​​

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Cattle feeders, take note that were weather issues to lower yields in the western corn belt, corn may or may not be higher, but your basis will most likely be.  Basis contracts are hard to come by, but ownership of the corn is not.  Therefore, watch the weather closely and any hints of trouble, the July of '26 call options are the ones to own.  

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Energy/Bonds:

Energy is higher.  Energy is anticipated to continue higher.  Bonds were a little higher but all note denominations were lower. Inflation is not anticipate to subside anytime soon as it is not commodity inflation that is the issue.  It is everything else we have to have that is expensive.  Money, insurance premiums, health care, and of course, taxes just keep getting higher.  Since there is no hedge on these markets of necessity, I can't see where inflation will subside much, if any.  So, I don't expect bonds to rally by much, if they do, and I expect equity share prices to continue lower as there won't be another round of 6 trillion thrown to the wind.  Not only that, today is was announced that on May 5, student loans and defaults will begin being paid again, or at least we hope.   Today's price action in equity indices is believed to be a correction in a bear market.  

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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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