Shootin' the Bull about making the consumer pay

“Shootin’ The Bull”

End of Day Market Recap

by Christopher B. Swift

​3/26/2025

Live Cattle:

The cut in slaughter pace is expected to bring a top to the market quicker than anything else could.  Recall the outcry of the public when eggs were too high?  The Trump administration imported tons of eggs, increased import capabilities and laxed some rules in the US that allowed for broiler eggs to used in human consumption.  While I have heard of no public outcry yet on beef, it may be coming as box prices continue to soar for which the price increase will be pushed to the consumer.  Whether there is outcry from the public or not, recall that inflation has a tendency to spur innovation, create substitute or alternative products to meet the needs, and lower demand as fewer can afford the product.  All of these are at play at the moment.  As many contend there is no downside due to the extreme shortage of inventory, I contend there is about the same amount of inventory, but a whole lot more is wrapped up in vertical integration, therefore never available to the open market.   This is a pitch battle between feed yards of attempting to remain solvent in a time frame of excessive capital outlay.   

​

Feeder Cattle:  

Backgrounders, and all production underneath, continue to enjoy the cattle feeders aggressive bidding. As there have been times in the past for backgrounders to break out the Pom Pom's and root for the cattle feeder to just keep bidding higher, this is believed another time frame for.  As some continue to urge cattle feeders to not cave on lower packer bids, the same methodology should go for backgrounders to urge cattle feeders to not cave in and pay less for incoming inventory.  Cow/calf operations should be doing the same, urging the next producer up the scale to assume even more risk in order to keep the price going up.  Note that this seems like an awful lot of urging to have to be done to have producers bid in a manner that most want them to, higher.  The rally from the September of '24 low has been phenomenal to say the least.  The last 14 days of the rally blew the top off and make new historical highs across the spectrum of cash, weight categories and futures. 

Now, do you want to be marketing into these high prices, or hope the trend higher lasts forever?  Some quick math may help.  Via the May contract, from the September of '24 low to contract high was a gain of $62.97 or 27%.  The last 14 days of the rally was $25.42 for a gain of 9%.  The at the money May $285.00 put is $6.50 or 2% of the value of the contract.  Out to August and you can split between the $290.00 put for 4.2% of the value or the $288.00 at 3.9% of the value of the contract.  You have incurred significant gains over the past 6 months with nearly a third having come from the past 3 weeks of trading.  The touted reliance of the consumer is about to be tested further with the higher box price filtering into retail outlets over the next 3 weeks as today is the highest box price in this move. 

Corn:

All ended soft on the day.  It appears a holding pattern is in place until we get confirmation on acres to be planted on the 31st.  

​

Energy/Bonds:

Energy was higher, but off the highs by the close. As I thought the top was Monday, then Tuesday, I now believe it to be today.  Like the corn, I am in wait of opportunity to be a buyer.  The extreme drought aspects for this summer, coupled with further disturbances throughout the middle-east, fuel and feed are believed the two markets to watch in an attempt to not be without were something to spark a rally in either. Note that both are at the opposite end of the price spectrum from feeder cattle.  As well, government actions can do little to stave off a drought, and while may be able to do something about further escalation in the middle-east, it would only take a day or two to foil the best laid plans.  Bonds were lower because inflation, not necessarily commodity, is still running at elevated levels.    

​

​

 “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.

​