Cattle Futures Impacted by Low Domestic Herd

The US domestic cattle herd is said to be at a 60-year low after the biggest cattle producing state (Texas) finds itself in the third year of drought.  Major food corporations such as Cargill & Tyson Foods are reportedly doing everything they can to maintain profit margins amid much slaughterhouse vacancy.

Just last month, the USDA stated the slaughter of commercial cows in the first half of the year may be the largest culling since 1996 in part due to nearly half of Texas pastures in poor, to very poor shape.  When you also take into account hot & dry weather and three years of rising feed costs, there is little incentive for cattle producers to maintain a larger herd size.
           
Christian Moreno, a commodities broker for HighGround Trading Group in Chicago, had this to say regarding the current cattle futures situation, After yesterdays wide range and strong close it looks like the cattle market is well positioned to test the June highs and continue its uptrend.”

The trend of rattle futures had been down for much of the year, but last month the trend has turned upward.  I will be looking to buy cattle futures on dips.

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