"Shootin' The Bull" Weekly Analysis...

For the week ending April 25, 2025

Shootin' The Bull about Shootin' The Bears

Written by Chris Winward... Swift Trading Company

This week's price action left the cattle bulls sailing into the weekend with plenty of reasons to celebrate holding out for higher prices in the cash and futures markets.  The early 216 cash trade in Nebraska set the stage for asking prices $3-4 higher than last week.  Markets were relatively quiet over the second half of the week as traders awaited the cash trade to develop.  After today's close, $215 was passed in central Nebraska.   April and June fats made new contract highs while the back months failed to take out the contract highs made in March.  Open interest has been fluctuating and the intraday chop is a result of indecision- traders' use stops that are tighter than normal, people don't want to hold positions overnight, etc...  The fundamentals are strong and boxes are holding above the $330 level, despite the broader economic concerns and trade war headlines.  US Beef demand is healthy at the moment and consumers' willingness to pay up for beef over cheaper proteins has been seemingly unphased by less spending power.  With all that positive news, I believe we could be nearing an inflection point on the demand front which could start to work its way into the scenario.  Recent data shows that consumers are less optimistic about the current state of the US economy.  The University of Michigan's Consumer Sentiment Survey was 10% lower month-over-month in April and almost 35% lower than it was last year.  As in 2009, frozen pizzas are seeing a spike in sales as well, indicating that people are staying home instead of dining out. 

All that being said, It's hard to make a bearish argument when cattle futures are making new contract highs. This begs the question- How or when do you hedge in this environment? I get this question a lot and my response is often this:  You do not have to pick a top when making marketing decisions.  It's impossible and nobody is a good enough trader to pick the exact moment where a long-term bull market reverses.  I like long put options for smaller producers because gives you some flexibility vs just selling the futures and living with that decision.  Options strategies are many and each vary in complexity and risk factors, so please make the effort to understand these factors before placing trades.  Your broker should help with this.  I don't recommend waiting until the board reverses because that initial move down is often swift and it is hard to get anything done in the options markets as volatility premiums swell.  Recall the selloff in early April that dropped the August feeder futures $22 in 4 sessions.  That contract has since regained all of those losses but it took 3 weeks to do so- stairs up, elevator down.  Last week's Commitment of Traders' report showed a decrease in managed money positioning in the cattle complex, both long and short.  This week's report showed them adding more long than short positions.  The current MM long position in feeders represents 46.6% of total open interest.  In fats their long position is 37.6% of total open interest.  Keep in mind that this data is of last Tuesday.  

Grains had a relatively quiet week for this time of year and as no material threat exists for the '25 growing season.  Some corn planting delays in the south due to rain, but nothing enough to move futures to any great extent.  Chi wheat was the weakest and is flirting with contract lows to close out the week.  Concerns of potential dryness in the Midwest are starting to surface which could lend support in the coming weeks.  Corn futures are 60 cents off their contract lows and US corn export commitments are up 25% over last year.  Rains in Brazil are helping the Safrina crop.  The CME is raising daily price limits on corn, wheat and beans on April 30th.  

The energy markets had a volatile week but showed some strength to close out the week.   Gasoline demand is healthy and crude oil continued to reject the Liberation Day lows in the mid 50's.   I believe crude has found some footing and that energy could move higher in the coming weeks given the upcoming OPEC meeting and lack of a peace deal with Russia and Ukraine.  Even natural gas, which has been the worst performing commodity in the energy sector, is showing signs of a pulse.  Headline risk is here for the time being and if you need to secure your fuel needs as we get into planting season get with your provider and see what you can lock in.      

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.

An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits.  You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources and other relevant circumstances. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.