Cattle prices

[mbdog]

declining volumes and declining-sideways open interest October thru jan is cautionary flag for me. Trending RSI has been violated IMO. Not saying upside futures and cash dont exist...but trailing stops on long paper, buying puts would be something worth considering. Shorting futures...no way. With US vs Canadian$ positions, cash can strengthen while futures need not this quarter. Don't think imminent crash in cash. Still think the broader macro objectiveis the market-charts are trying to establish a significant point in space. Argueably Oct easily trades 225-269 range. Will be non-livestock event to spoil party.
my 2 cents mcdon.
There are traders on AV, but most beat into submission.

[mcdon]

I like your analysis mbdog. Beef production in Canada is broken. High prices should lead to increased production, instead it is giving farmers a chance to liquidate (good for them), which is resulting in an even smaller national herd. (why wouldn't farmers sell heifers off pasture for $1500).TRying to forecast prices in a market that is not responding to market queues is futile. Yes there are some traders here, but little incentive for them to participate.

[bucket]

Look at the average age of the cattle guys.

Their sons are gone because there wasn't a living to be made.

Prices are high so some are getting out.

Herds are shrinking but getting younger.

You can't sell 10 old cows and put 10 heifers in thinking the overall herd is getting larger can you?

Costco can't source Canadian beef.

One calf a year.

Yeah this could turn any day.

The cattle industry has been descimated by events with no support.

Next thing the government will have a course on how to raise cattle. They should have had a program to keep the next generation on the ranch.

[mbdog]

At some point, prices may get high enough to overcome lack of confidence in this industry....or build in enough risk premiums to overcome the political risk hanging over the livestock industry. Fundamentals and profitability are improving, but I still see little in the way of growth-expansion. Feds are doing their part to improve macro conditions...not so much provincial-local government....vanity getting in the way.
But this wasn't the point of your thread. Would have Oct stop at 225ish, but think party just getting started in the front. Believe I was in Errols or Charlies camp last quarter regarding heightened awareness towards hedging.
Hope there is a rocket ride like you suggest...not a false breakout...and producers price-hedge wisely.

[mcdon]

Bucket, you have identified what is moving the market, usual rhetoric does not apply. This is what some traders/analysts are having trouble with. Imminent crash ? very unusal fundamenatls suggest otherwise{stranger things have happened, BSE}.

[sumdumguy]

Cotton, face it, gold has lost its lustre -AGAIN. I am not willing to wait 30 years for the next rebound. It just reinforces the old addage, "every dog has his day".

[bucket]

Lack of support when bse hit is one reason this industry is cautious.

Older and real cattle guys will sell out or sell down and rebuild if the younger resources are available. In many instances they are not.

Talk the trade thing all you want. You still need the physical cattle to make it all work. Fact is, its a pretty tough business to start up.

And talking about the impending down turn won't encourage many to increase numbers. Actually quite the opposite.

[kato]

Anyone here have relatives/parents who grew up during the Great Depression? If so, you will know that it changed them. I knew people of that generation who, even when they had money in the bank, lived like it could disappear at any moment. They were cautious, uneasy with risk, and lived with the thought that it could happen again.

Today's cattle producers have been affected the same way. When you live on the edge for that long, it affects you. Security becomes the priority, and a lot of the ones selling out now are likely just trying to retire debt before they retire. Debt reduction and elimination is our top priority too. Not selling the cows though.

As for this trading thing, it's something we've never gotten into here. We use the price assurance program, and leave the paper trading to others. At least we've got a base under us in case of a disaster, but still have the upside open. We know guys who locked in the feeders they bought last spring to contracts with feedlots who were just going crazy watching much higher priced cattle go through the ring this fall. Who would have guessed?

Crazy times.

[cottonpicken]

https://www.agriville.com/cgi-bin/forums/viewThread.cgi?1395846522

In the past 11 years i have watched nearly all the commodities set there new trading ranges just like they did in the 70's.

The great part is we are not going to have as long of a wait for another round of ranges,unless of course someone steps in and stops the madness.

[errolanderson]

A 400lb western Canadian calf is now worth . . . .

one (1) ounce of gold plus eight (8) ounces of silver(converted to loonie tunes).

[wmoebis]

Good comparison Eroll
What is barley per bushel worth when that calf is butcher weight?

[bucket]

I will wait until they are worth 3 magic beans again. Then get my kid buying them.