Drought May Halt Cattle Futures Slide

A former National Cattlemen’s Beef Association president, and active Montana cattle rancher is stating he had to sell calves and stop purchases of cattle after his pastures dried up.  He also stated his current herd of cattle is only 85% of normal.

This third-generation cattle rancher is talking about our nation’s worst drought since the 1930’s, and the shrinking domestic cattle herd which is presently the smallest since 1952 – all factors signaling smaller beef inventory and ultimately higher beef prices for everybody.  USDA data already shows sirloin costs this past December 10% higher than the year earlier.

Barb Levy, chief director for Futures & Options Xecution’s futures division in Chicago, had this to say regarding the current cattle futures situation, “Last year’s drought resulted in heavier sales of cattle last summer, and now the supply has become very tight.”

Cattle futures trend is indeed down at this time, but can change without a typical “bottoming” formation.  I must await cattle futures to pull-back higher in beef prices in order to get short this market lower-risk.

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