Morning Livestock Report, 09/24/2015

Thursday, September 24, 2015

Adam Stout

The cattle markets traded sharply lower from the start yesterday and pinned themselves limit lower by mid-session. Nearby Oct live cattle synthetically traded another $1.00 lower (on top of the $3.00 limit) by day's end. A very weak spot cash cattle market has caught much of the finger pointing, and indeed that market is still a mess. But I'm now of the belief this is larger than simply a cash cleanup problem, rather the entire complex (fed cattle, feeders, beef) all in a major realignment back to reality after last year's blow-up to new all-time highs. As we've noted here before, herd rebuilding has begun and high prices for long enough have clearly injured beef sales and encouraged big imports. In casual conversation with a petroleum colleague here in the office yesterday, he says "that sure sounds like the crude oil market!" He's right... high prices have cured high prices. We'll be expecting another lower start this morning, pricing in the "additional" weakness implied yesterday afternoon. Do remember both LC and FC futures will be working with expanded daily limits today, $4.50 in LC and $6.75 in FC.

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