"Shootin' The Bull" Weekly Analysis...

For the week ending March 28, 2025


In my opinion, the cattle/beef industry continues to shift, wiggle and squirm in the attempt to find margin.  Total reliance upon an ever-increasing price seems the only aspect of profitability.  This event is attracting participants like few other times in history.  With a belief that further strengthening of supply chains through vertical integration is sought, the capital having to be used to accomplish such is bothersome for all and troublesome for some.  I anticipate a down draft in most all commodities over the next few weeks.  I anticipate a lower trade in corn and or diesel fuel to be opportunities to lock in some input costs while prices are at the opposite end of the spectrum from feeder and fat cattle.  Simply consider the price spreads between the needed input costs and where fats and feeders are currently trading, and it is not difficult to see where margins could shrink rapidly upon any small reversal of input costs and or reversal of cattle prices.
I feel strongly that this current environment is one in which commercial end meat sellers are attempting to gain greater access to cattle through vertical integration.  What we do not know is to what extent a cattleman will go to in order to remain in the cattle business.  This a very difficult and touchy subject to discuss as this is one's livelihood. Unfortunately, this is a commodity industry with great historical references of others that suggest when there is too much production and processing capacity for the number of animals to produce or process, someone gets left out.  As well, the higher prices produce great incentive to create alternative and competing meat proteins, import more beef, and lower consumer demand. 
With expectations of at least a minor recession on the horizon, if not a large one, producers may get a break in interest rates.  Were bonds to begin moving higher, it would be a signal that the economy and or consumers need a little stimulation.  Consider watching this very closely as bonds are expected to move back to previous levels around the 125'00 to 129'00 levels.  This may not be much of a break, considering the amount of working capital having to be used, but anything will help at this point.

Christopher B. Swift is commodity broker and consultant with Swift Trading Company in Nashville, TN. Mr. Swift authors the daily commentaries "mid day cattle comment" and "Shootin' the Bull" commentary found on his website @ www.shootinthebull.com.
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