“Shootin’ The Bull”

End of Day Market Recap

by Christopher B. Swift

​4/16/2025

Live Cattle:

It is suspected that the past 3 days of buying is coming from short covering, or producers applying the Texas hedge, as we have seen little increase in open interest.  As well, what little was seen on Tuesday showed that buyers are again buying the top of the market while sellers are selling the top of the market.  Regardless of who is the buyer of futures today, they can't be thanked enough for narrowing the basis to at least this width.  Even with today's higher futures, the basis spread is positive, wide, and offers nothing but discounts into the future.  All the while, top dollar is being paid for incoming inventory today and well into the future. At this juncture, it appears that you have few options.  Continue to assume significant risk with objectives of an ever higher price, or initiate minimum sale floors in a poor basis spread.  What an interesting predicament.    

Feeder Cattle:  

Thursday's on feed report is expected to show for the 32​'nd month in a row over 11 million head on feed.  I continue to scratch my head wondering when we are going to run out of cattle as there are already no more cattle.  Some how, some where, these cattle just keep showing up on feed when there are no more cattle, with very little historical weight differentials when placed.  In my opinion, I don't think the supplies of cattle will be much of a concern in the very near future.  I am looking at the equities as in a bear market with expectations of the past few days as a correction within a very large down move.  Consumers are pulling back and inflation is impacting discretionary spending, even with only minor tenth's of a percent change in economic calculations from month to month.  The sharp rise in interest rates, and loss of equity wealth, is expected to curtail consumer spending even more. Whatever inflation the tariffs may cause will further impact consumer spending.  As the bulk of inflation has nothing to do with commodities, it seems that a decline in commodity prices is less likely with some commodities higher that may impact consumer spending.  Fuel being the number one culprit of discretionary spending.   Long way around the barn, but futures traders have produced an even, if not negative basis to some months, while slim positive basis to others.  With fence options spreads one can lock in a minimum sale floor a few dollars from the index with predetermined leeway to the upside were it to materialize. I recommend you get something underneath your production by the close on Thursday, prior to the on feed report.  This is a sales solicitation.  If you are a cattle feeder that bought the wide positive basis in the feeder cattle, you have closed it, suggesting the cash market is the cheapest place to buy new inventory.  

Corn:

Corn was firm.  Corn is expected to continue to move higher.  Input costs of corn remain cheap in comparison to prior years and not that much more expensive than in prior months.  Input costs are relatively low on the historical price scale in comparison to cattle and feeder cattle.  I recommend you continue to consider this as you spend more money to produce that pound of beef. ​​

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Energy/Bonds:

Energy was higher.  Energy was in an up trend prior to the tariff issues.  This leads me to expect the resumption of that up trend now that those issues are cemented into the economy.  Bonds were a tad higher, but the spite selling of US debt has not subsided yet.  Equities are sharply lower with no expectations of consumers receiving any increase of government services or funds.  Those screaming to refund their agenda's are without a job now and I have to believe that the Biden administration produced thousands of companies through their easy money handouts.  Those companies, and any jobs if were actually worked at, are going by the wayside quickly.  Historical reference suggests that living within ones means, after excessive spending on non-tangible items, producing employment with no meaning, and spending with no regards, has consequences.  Those consequences tend to lead to less spending and more productivity.   

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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.