Cattle Futures Digesting Tight Supply

In the midst of a strong downward cycle in cattle prices, cattle futures halted the price decline and closed “up” for the first time since the first trading day of the year.  Feeder cattle prices are just about the same.

Japan’s health minister told reporters today their country will allow US beef imports for cattle that are 2.5 years old – up from 20 months previously – starting as early as February first.  The Food Safety Commission recommended the change in October emphasizing no increase in health risks.

There seems to be a consensus building that we’ll see some tightening beef supplies in 2013.  On the heels of Japans decision to ease their restrictions on U.S. beef imports, Cargill has made idle a beef processing plant,” said Kevin Riordan, director of research at Capital Trading Group in Chicago, regarding the current cattle futures situation.

Cattle futures are clearly in a down-trend and any retracement higher in cattle prices would mean a low-risk shorting opportunity.  I will need cattle futures to come back significantly higher in order to get into this market


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