Friday, April 26, 2013
High Speed Casino
I hate to quote Jerry Garcia but "what a long strange trip we are on". Ok, I paraphrased some but it accurately describes the roller coaster ride the cattle market has been on lately. It is kind of like playing a hand of Texas holdem where your only options for betting are All In or to Fold. We started the week with everyone wondering were the bottom is and ended the week with every feeder cattle contract above the 34 day moving average. Jackpot!! Fundamentals seem to get about as much use as a 9th grade boys Greek Literature book and in case you have never been a 9th grade boy, let me tell you that isn't much. For example, the market completely ignored last week's seemingly grizzly bearish placement figures and turned into the Schlitz Malt liquor bull. Every crop centered publication in the Western Hemisphere has been printing non stop about the late planting and cold spring weather but corn futures are nose diving. All it takes is one fake tweet to send the markets in a death spiral as the Stock Market proved this week as well. It takes a strong stomach to play the one armed bandit that the cattle market has become lately. After saying all that, all the fundamentals are lined up for a rally in feeder cattle. All of the big three indicators are bullish. Supply is well documented to be tight as Dick's hat band, demand is finally getting the spring time seasonal temperature moderation it needs to sell more product, and feed cost seem to be headed to a more reasonable figure. To add more fuel to the optimism I have seen a definite increase in the amount of heifers being held back as replacements which is going to make Dick's head really hurt in the short term. All in all it has been a good week for sellers and if you have any cattle ready to market I say push the chips to the middle of the table and say "All In".