The Cattle Cycle - Higher Prices for Longer?

The Commodity Report #178

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Futures Trading is Booming - due to Weather Risks

Agricultural futures and options closed Q3 with 10% growth compared to Q3 2023. This surge was notably fueled by a record 1.6M ADV in August, marking a 19% increase in growth year over year. Drought conditions in Brazil, poor weather in the Black sea, low river levels, increased fund participation and low cattle herd have traders turning to Agricultural futures and options as essential tools for managing risk.

The Cattle Cycle - Higher Prices for Longer?

The cattle cycle tracks the total inventory of both cattle and calves in the United States, averaging 8 – 12 years from peak to trough with 12 peaks and 11 troughs documented since 1890. The cycle is indicative of producer and packer supply and demand, which are influenced by immediate and forecasted cattle prices, input costs, weather, breeding and genetics.

Source: CME

This cycle works as a fundamental backdrop of higher cattle prices for the years to come - fluctuations come by weaker or stronger demand by the consumer/demand side - but it's quite clear to see where the supply side is - on average -headed over the next years.

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In Other News…

Billionaire investor Paul Tudor Jones said last week on CNBC: “All roads lead to inflation. I’m long gold. I’m long Bitcoin. I own zero fixed income. The playbook to get out of this [debt problem] is that you inflate your way out.”

He positioned himself for a Trump victory - which in his opinion will lead to more inflation and ultimately to more inflated asset prices.

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This week, look out for the following:

• JOLTS Job Openings on Tuesday

• GDP data on Wednesday

• Job Market Report as well as the ISM Manufacturing PMI on Friday

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sample idea - cotton - from Kuemmerle Report - 21.07.24

A subscription costs $29 a month, and you will receive an additional in-depth report called “The Kuemmerle Report” every Sunday evening at 6:00 PM CEST. The report covers all liquid commodities, like in the sample above visualized. On top of that you get our takes on weather patterns as well as our latest economic outlook. That information will only be published to members and not the general public.

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Till next Monday, Lukas

If you have any questions in the meantime, please feel free to contact me via X or Mail.

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