Cattle Futures Sink on Feed Costs

Yes, the rumors are true…look for beef prices to continue higher.  Cattle futures have been heading lower for the past week as the worst drought since the mid-’50’s and high feed-prices have forced cattle ranchers to reduce their herds substancially.

The USDA has estimated beef output will be the lowest next year after the dust settles with the drought situation along the entire Great Plains region.  Currently, the US domestic cattle herd is already at a level not seen since the early 1970’s and the USDA is reporting record beef retail prices just last month.

Kevin Craney, a senior commodities broker for RJO Futures in Chicago, had this to say regarding the current cattle futures situation, “The high feed costs and drought conditions continue to put feedlots further behind.  Herd culling continues with inventories shrinking to the smallest in years.”  Craney added, “With the herd shrinking (cattle futures) price support will be found as we move through the remainder of the year.”

Cattle futures (and feeders) are technically in an uptrend, but have not broke-out to the upside just yet.  I am looking for a way in both cattle futures markets and I will start with feeders tomorrow


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