“Shooting the Bull”
January 30, 2026
live cow:
CattleCon is happening in Nashville this year, and I’m looking forward to reconnecting with friends and meeting new people. I won’t have a booth, but I plan to be in the gallery on Tuesday, February 3rd. If you’re at the show during the day, send me a text about where you are. I’d love to catch up. If you want to set a specific time to chat, feel free to reach out. You can reach me at 615-828-5891.
In my view, the latest inventory report was mostly as expected. It seems that liquidation has halted, even if there are signs of growth. This quarter marks the lowest production we’ll see all year, indicating that cattlemen are likely to pay high prices right now and possibly face discounts later on. Staying ahead is crucial. The increase in stocker and feeder cattle on the market suggests that there are more June feeder cattle contracts in play compared to last year. These lighter cattle should hit the market again in late spring and summer, likely taking record prices in some categories, although future discounts are also possible. Basis has seen a significant jump this week, with fat cattle moving into a negative basis briefly, and the backend tightening. The largest base spread reduction was noted in feeder cattle; however, by Friday, the basis had widened again, the index had gone up, and futures dropped sharply, potentially leaving a lot of room for error with Monday’s opening.
What’s particularly interesting is the five-wave rally that didn’t reach contract highs for almost all months except for the furthest trailing contract month. The CME FC index shows this five-wave rally from November’s lows, and I feel there’s a ceiling approaching rather than further upward movement. This aligns with the expectation that replicating last year’s events will be challenging. When things normalize, profit margins are likely to shrink, and the price band will narrow too, with the peak already established. This leads me to think the next likely scenario is a decline that might or might not exceed the November lows. It’s also possible—though maybe not probable—that this week’s high could end up being this year’s contract high. Consequently, contracts like those for November and January ’27 may seem overpriced. That’s not entirely unusual. If the October 2026 high holds, it would support the notion that markets don’t always reach highs or lows at stock peaks or troughs.
Additionally, cattlemen are grappling with inflation, just like consumers. People are facing rising costs across the board, whether it’s for everyday essentials or commodities. While lower commodity inflation might have provided some relief, crude oil is back over $65.00 per barrel, and diesel is up by $0.60 in just six weeks, pushing energy inflation higher. Utilities and transport are among those utilities that have experienced rising costs too. Consumers will definitely feel those changes at the gas pump. Precious metals have had a turbulent time, with significant price fluctuations. Short positions were quickly wiped out this week, and by Friday, long positions were extinguished rapidly. Bonds ended lower this week due to ongoing inflation, and it seems the administration is aiming for more inflation by continuing to print money—something the stock market thrives on. A year ago, I felt like everything was spinning out of control and could fly off the rails at any moment. I’m genuinely surprised things have held together this long, though it still feels a bit shaky.
“This is a solicitation or is in the nature of a solicitation.” Futures trading is not for everyone. It involves significant risk of loss, so consider carefully whether it’s suitable for you, given your financial situation. Past performance is not indicative of future results, and there is no guarantee your trading experience will mirror past experiences.
