Tighter Beef Supply Lifts Cattle Futures

An outlook of domestic beef output “dropping” as demand increases have sent cattle futures higher this week after their big drop one week ago today.  Cattle futures are currently hovering around “unchanged” from yesterday, however.

The USDA has forecasted beef production this year should fall 1.2% to its lowest levels since 2005, but USDA data also shows wholesale beef prices averaging $1.94 a pound this year – the highest on record since 2004.  A Texas A&M economist is predicting beef output to scale back a full 6% next year and another 2%-3% in 2015.
Kevin Riordan, director of research at Capital Trading Group in Chicago, had this to say regarding the current cattle futures situation,Increasing evidence that there could be some tightening of supplies in the cattle (futures) market has been increasing supportive to prices.”

The trend for cattle futures is technically “up,” however there is a “topping pattern” in place for both the fat & feeder cattle contracts.  We’ll maintain our long feeder cattle futures position until the picture changes otherwise. 


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