“Shootin’ The Bull”

End of Day Market Recap

by Christopher B. Swift

​4/9/2025

Live Cattle:

Today's price action had a little bit for everyone.  If able to swap options positions at the lows of today's range, all the better.  If not having done anything, today's rally shored up the basis by a considerable amount.  The loss of over 38K contracts the past three days has considerably increased the volatility, and today is the reflection of.  Although still wide, and little cash established trade this week, the sharp narrowing of basis is believed a gift horse.  Today's rally changes little in helping the plight of cattle feeders.  The enormous price spreads between starting feeder and finished fat continues to plague cattle feeders.  Of the most interest, no one seems to care.  As consumers are believed shifting, restaurants & grocer's passing high beef costs along to the consumer, and packers continue to cut kills in an attempt to make margin, cattle feeders are doing nothing.  All of the sectors above the cattle feeder are, or have done something to help combat the high price of beef/cattle.  Not the cattle feeder though, with representation of the feeder cattle index still at historical high, and not much sign of breaking, they are showing their hand by not doing anything to help combat the loss of margin or attempt to bring margin back to their operation. 

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Even with today's stupendous rally in fats, it seemingly did nothing to help cattle feeders.  Of a small benefit will be the narrowing of spread between the index and fall fat cattle futures.  Other than that, fat and feeder futures were up equally percentage wise, with corn, fuel and the price of money all higher.   

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Going forward, I am going to use current contract high, per respective contract month for the next round of marketing's. I recommend you do what you need to whenever it is most favorable to you.  I am going to approach it from the stand point that if one can buy the at the money put and sell an out of the money call above current contract high, I recommend placing those options spreads strategies.  This is a sales solicitation.  I highly recommend you take the next few days with a few grains of salt.  I cannot recall ever hearing a sitting President make a written recommendation to buy the dip in the equity markets.  In a tweet this morning, he stated to buy the dip.  In a little over 4 hours later, he reverses a major world changing event that sends market soaring higher.  I am very skeptical about the influence of a sitting President making direct comments on market movement and then a few hours later produce information that is beneficial towards his statement.  

Feeder Cattle:  

If you are marketing feeder cattle in a July video sale for which there will not be time to converge basis, I recommend buying the at the money August put and selling the $20.00 out of the money put to create a bear put spread of $20.00 and a premium of $7.00, producing a $13.00 window of opportunity and a $7.00 premium to overcome were prices to move higher in the cash.  This is a sales solicitation.  

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If you are marketing feeder cattle in August, September or October, I recommend buying the at the money put and selling the $10.00 to $20.00 out of the money call to create a synthetic short futures position.  This is a sales solicitation.  There won't be time to converge basis in July, so don't limit the upside.   There will be convergence if marketing as close to the expiration of a futures contract month you are marketing in.  Therefore, at this juncture, the August, September, and October can all be hedged at the money with the short call strike at or above the current historical high of the index.  Whatever you do, don't take anything for granted as this situation is a long way from being over with. 

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The cattle feeder continues to lose margin, increase capital expenditure and is believed going to do something about it. When or what remains the question, but in my opinion, shutting down a percentage of occupancy will go a long way in curtailing too much production capacity for the number of animals available.  When do they start?  Yesterday. 

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Corn:

​ Corn was higher today.  High river levels are impacting barge traffic.  It is so sloppy wet in the south east it will take weeks to get in the fields to plant and for some, just to start cleaning up from receding waters in river bottom fields.  Thursday's WASDE report is anticipated to show further declines in corn carry out stocks.  Corn made a new high from the 3/28 low and is only $.02 from the 3/11 high.  Corn is now $.30 off the low. ​

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Energy/Bonds:

Energy started the day sharply lower and ended sharply higher with a $7.50 range today.  That is some volatility.  Booking fuel as it has moved lower is expected to have some averaging down their fuel costs for spring planting or summer chores.  Bonds are the big news.  I believe, not to be confused with fact, that China is dumping US debt on the market at a tremendous loss to them, but still a retaliatory act due to the tariff's.  China holds significant US debt and is now giving it back to us.  There are seeming no buyers that can offset the selling pressure from believed China.  In three days, bonds have wiped out all of the first quarter gains.  This move will widen the profit margins to banks significantly as they borrow at the Fed window rate and loan out at retail rates based upon the free floating bond and note markets. As the rates via bonds and notes have jumped sharply, the margin window opens to banks.  To you the consumer, everything you buy on credit will cost more.  Again, I cannot recall a sitting President state "it is a great time to buy" and a little over 4 hours later make a sweeping reversal of policy only 3 days old.    

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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.