Australian Cattle Market at Record High Diverging with US Cattle Futures

Maybe cattle futures “down under” are lagging behind the US livestock market, but Australian cattle prices are hitting record highs as our domestic cattle market continues to slide from late last year’s highs. Feeder cattle futures for October delivery are trading down $4 (CWT) today currently at $1.955 per pound at the Chicago Mercantile Exchange.

So far the Australian cattle market has realized gains as high as 68% (YTD) over the past year at a time when US cattle futures are down about 10% for the year, and steer values in Brazil are seeing their lowest in the past five years. It was only this past October that US “live cattle” futures saw a record high of nearly $172.00 a pound (CWT) after animals were taken out of the beef production line and beef prices raised for the animals that were available.

The US cattle market is showing it has already priced in the lack of supply and has discounted the drought-breaking rains earlier in the year by failing to rally,” said Nicholas Medina, a futures and options specialist for Capital Trading Group in Chicago, regarding the fundamental assessment of the cattle futures markets. Medina added, “It is clear the domestic cattle market is in ‘full-swing’ rebuilding mode and cattle futures have little chance of return to new highs at this point in the season – in my view.”

Feeder cattle futures trend is down with no bottom in sight. Two weeks earlier feeder cattle futures was at a crossroads to test the highs of last year, but have failed miserably since. Back to “what is good for the consumer” as time passes…

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