Cattle futures are slightly higher on the news South Africa’s worst drought in over a century has damaged more than 5% of the nation’s cattle herd (plus pork breeding herds). Cattle futures are up .17 cents today currently trading at $137.15 per cwt at the Chicago Mercantile Exchange.
The cattle head-count before the drought was reportedly 13M head, but after the El Nino weather pattern set in it prompted the the least amount of rainfall in South Africa since 1904 – effectively wiping out the crops and grazing there. According to the nation’s largest farmers’ lobbying group, corn, wheat, sugar, livestock, have all been adversely affected and if rains don’t come soon, then the citrus crops are threatened with longer-term damage.
“The drought in South Africa is seriously hurting manufacturing, farming output, and overall growth with one in a reported four there out of work,” said Kevin Craney, Director of Managed Futures at RJO Futures in Chicago, sharing his fundamental assessment of the cattle futures market. Craney added, “South Africa is Africa’s second largest economy but its annualized growth rate was a mere six-tenths of one percent last quarter.”
Cattle futures trend is up as of last week. Looking at a chart for cattle futures it has, however, been trading sideways since mid-December so I expect something’s got to give soon.
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