In my opinion, the stranglehold cattle producers obtained from 2021 to 2024 was due to excessive printing of money, and maybe some drought. The tightening of the stranglehold came with government intervention of the Mexican border closure and immense tariffs on imported beef in 2025. The initial aspects of the stranglehold still remain, in that consumers are still willing to pay the higher price, drought still an issue in major cattle production areas, and seemingly the government continues to print more money. The grip that turned the market blue in the face though has now been, at least for the moment, influenced by the government in anticipation of reversing previous interventions. If those interventions are reversed, it would strengthen my analysis of a return to the level of price prior to the government intervention. This suggests back to around the $241.00 area for feeder cattle, via the CME feeder cattle index. No, it most likely is not going to fall there all at once, but it does have a good head start. As the cattle market is expected to seek normalcy, it may take some time to trade down that low. So, consider that it may take until this time next year to achieve this level. Consider then that as the index declines, to what extent in time and to what futures contract will those targets most likely be met? That is the approach I have taken in labeling the downside retracement price projections on the index and then look to see which contract month could be most likely to meet that price range. For the time being, I continue to anticipate significant volatility as too many questions remain unanswered and the volatile actions by the Trump administration are undeterminable. With no cash index of fat cattle prices, using the weekly continuation chart, the same level for fats as feeders is believed to $182.00. These were the lows made this time last year when the border issue started.
Input costs continue to not go down. The down trend in diesel fuel was reversed abruptly to push prices above the June highs in just 3 weeks, causing any new purchases of fuel to be as much as $.40 to $.45 per gallon higher. Corn broke out to the upside on Thursday of this week to most everyone's astonishment. How can corn rally with so much of it? Beans continue to climb their wall of worry, and even wheat looks as if it has an initial thrust higher and forming a correction that is expected to lead me to recommend buying July Chicago or Kansas City wheat. Lastly interest rates continue to be high and stagnant. The desire to stimulate by the Trump administration doesn't bode well for attempting to lower interest rates. Were rate cuts to be stimulating, which I don't think they are, more government employees getting paid, and a potential cash payout would all be stimulus to some extent. Long story short, it doesn't appear that inflation is going to tic down, and maybe a short-term rise of inflation, doing more harm towards the first of the year when holiday spending's come back to haunt consumers on their credit card bills. For which by the way has more delinquencies than in any year in the past.
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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