“Shootin’ The Bull”

End of Day Market Recap

by Christopher B. Swift

​4/10/2025

Live Cattle:

Finally, feed yards and cattle feeders may be taking matters into their own hands.  Lower bids are surfacing at sale barns.  This will help, but if some rumors of feed yards cutting a percentage of capacity is true, that would do more good than anything to lower the price of feeder cattle. As has been stated, there is too much production capacity for the number of animals out there.  Cutting slaughter capacity brought profitability back to packers in the form of margins when it was found there was too much for the number of animals to be processed in the past.  That quickly turned south on cattle feeders as about the same time they began expanding, the packers were well into contraction.  With consumers believed going to continue to shift uncomfortably in spending habits, grocers and restaurants passing the higher costs to the consumer, and packers having cut slaughter pace, it simply leaves the cattle feeder having to deal with these consequences with no action from themselves. So, maybe, just maybe, feed yards will do something to help themselves find margin as it appears no one else is, and the reliance on an ever higher price to profit from seemingly starting to fade. 

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Futures have been violent the past two days of trading.  The volatility was beneficial for a short time as traders pushed futures sharply higher on Wednesday that offered cattle feeders and opportunity to lay off risk at much narrower basis spread than previously this week.  The massive loss of open interest suggests there will not be the volume available at price levels some will need to execute positions.  As stated last Friday, when the music stops, they don't hunt for a chair, they leave the party.  They have left and a few speculators and producers will be who provides the liquidity to trade into. 

Feeder Cattle:  

Backgrounders should note, and attempt to validate, any rumor of contracting feeding capacity.  I think this would do more to bring the price of feeder cattle down than anything.  The lower bids at the end of the week lead me to believe cattle feeders are attempting to do something about having to put so much working capital into the starting product. 

Futures traders have been of some benefit during the violent price movement.  The narrowing of basis at Wednesday and Thursday's high produced opportunities to market inventory with a fence options spread trade for which the sale of the short call could have been higher than the current all time high of the index.  I continue to believe that averaging your marketing's at the higher levels could well produce the highs you see for the year.  

At this point, ask yourself again, how much risk are you assuming, how much risk do you wish to assume, how much of that risk do you wish someone else to assume and what are you willing to pay for the assumption or your risk?   

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Corn:

​ Corn was higher today.  There was literally no change in the WASDE report.  Corn is seemingly moving on its own accord.  I can see the interest from an economic hedge standpoint of wanting to own a crucial commodity that can be a feed grain or energy source.  How much input feed costs risk do you wish to assume?  How much higher would it have to go before it began to be detrimental?  What would the price have to go down to in order to change cost of gain?  Answering these questions would be anticipated to help you make some crucial decisions while input costs are at the low end of the price structure and cattle/feeder cattle at the top end of the price structure.  ​

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Energy/Bonds:

Energy has been wild to say the least.  Crude oil has traded from 9:00am on the 7th down $8.78, up $8.22 and down $4.58 to today's low.  That is some phenomenal trading.  Nonetheless, it leads me to expect the unexpected and with crude having made a 4 year low this week, I recommend you do something about your fuel input costs.  Bond traders continue to sell.  The volatility in the bonds has been high, but nothing like other commodities and equities.  I think that is because those who are selling bonds are doing to spite themselves.  Recall that China and Japan buy huge amounts of US debt.  A large portion of that debt was purchased at a significantly higher price and lower yield.  So, cutting off your nose to spite your face, in this case, appears to be a very expensive way to show your disregard for US actions.  

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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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