Cattle futures have paused at recent highs from early October as news of the US domestic herd is updated – and it’s not looking good. Exports of beef to the US is reportedly jumping 35% for the 2014-2015 fiscal year to amounts not seen since 2004-2005 (according to a recent report from the Australian Bureau of Agricultural & Resource Economics and Sciences).
If you may recall from previous postings, the US cattle herd started the year at a record-low number of animals not seen since 1951 after prolonged years of drought forced cattle ranchers to cull their herds. This will help the Australian beef industry significantly as they are already reporting as much as 35% of their exports going to US dinner tables.
Kevin Riordan, director of research at Capital Trading Group in Chicago, shared his fundamental analysis insight regarding the current cattle futures situation by stating, “Cattle numbers are now the lowest since 1950 due to a prolonged drought.” Riordan added, “In light of the fact that U.S. cow slaughter is not expected to increase in the short term, cow/beef production will likely remain low and demand for beef imports strong.”
The trend for cattle futures is up with no bottom yet in sight. This cattle futures market is one where we must trade with caution in light of the limit up/down days we have been seeing in recent trading sessions.
ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.