“The Cattle Price Crisis” - Sentiment Warning
Commodity Report #240
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“The Cattle Price Crisis” - Sentiment Warning
During the week Barron’s published this cover story with the title “the cattle crisis”. While there is lots of fundamental backing for higher live cattle prices for longer, the cover story shows us that the live cattle price story has reached the masses. This gives room for a correction in these markets in our opinion.
Here is the long term chart of live cattle futures (LE) on an adjusted basis:
And here is the long term chart of feeder cattle futures (GF) also adjusted.
Feeder cattle futures versus live cattle futures represent two distinct futures contracts that serve different stages of the beef production cycle. Live cattle is heavier than feeder cattle - and therefore the one that’S ready for slaughter. The cattle production cycle typically spans 12-18 months from weaned calf to finished beef.
One could argue that feeder cattle reflected the problems with the cattle disease and the low herd count better in the price action - compared to live cattle, as those contracts thend to also be influenced heavier by customers demand for the finished product.
In Other News…
BofA’s most crowded trades as of February…
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Till next Monday, Lukas
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