Relentless Cattle Futures Free Fall Escalates Fear

If I was trying to get into the cow-calf business right now, I’d be taking in pasture cattle. I’d take their money and bide my time. Then, once the market makes up its mind (and crashes) pick those cattle up at a bargain and laugh all the way to the bank. — jtl 

From The Beef By Cassie Fish, CassandraFish.com

The enormous sell off that’s wreaking havoc in CME cattle futures is in its sixth day and showing only small signs of waning. There was a hope yesterday that the market decline might slow, but that was followed by limit down moves in feeders. In fact, the low thus far today in most active March FC came within 30 points of the August low -$35.70 off of its contract high- before finally reversing and going green on the day though still about $6 below last Friday’s close.

Have We Ever Been Here Before?

Seasoned traders have been wracking their memories searching for a similar downturn. Starting with a discounted structure, this break perhaps represents the greatest disconnect of futures to cash ever. Its velocity and magnitude formidable in the face of no apparent bearish fundamental news.

Outside market influences, fund rebalancing, deflation worries all have been pointed at, but the response by cattle futures in the enormity of the sell-off seems out of proportion and the technical damage done to charts tremendous.

Not Knowing Not Helping

The absence of a concrete reason for the break has worked against the market catching a bid because the fear of not knowing why has resulted in panic selling by some and a retreat to the sidelines by many. As the old saying goes, “if you don’t know get out”.

The cattle feeding industry has watched in dismay as deferred futures prices move further and further away from breakevens now higher than futures by $15 or more. April LC is trading $20 lower than the top cash fed cattle price paid 2 weeks ago today.

Cash prices have weakened in the last 2 weeks, but with packer margins black and producers reluctant to sell aggressively at lower money, cash is lagging far behind the board.

Futures are oversold, it’s Friday before a 3-day weekend, and LC cattle open interest lost another 2.4k of OI yesterday bringing this week’s drop down about 6k. These facts along with futures attempting to rally today could mean this break is exhausting itself for now.

Spring Downtrend?

But when traders look at the technical damage done to this market this week, in the back of the minds of seasoned cattle traders is the knowledge that, at least up until now, when Feb LC take out the December low in January, the market is on track for a contraseasonal move. Meaning, precedence indicates futures will trend lower into spring. Last year was a poster child for the exception-to-the-rule, but nonetheless, caution, concern and disappointment will now dominate the 2015 cattle market outlook until this market gives us a reason to think otherwise.

The Beef is published by Consolidated Beef Producers…for more info click here.
Disclaimer:  The Beef, CBP nor Cassie Fish shall not be liable for decisions or actions taken based on the data/information/opinions.

Environmental & Natural Resource Economics: The Austrian View

edited by

Dr Jimmy T (Gunny) LaBaume

Is now available in both PAPERBACK and Kindle

BookCoverImageMurray N. Rothbard was the father of what some call Radical Libertarianism or Anarcho-Capitalism which Hans-Hermann Hoppe described as “Rothbard’s unique contribution to the rediscovery of property and property rights as the common foundation of both economics and political philosophy, and the systematic reconstruction and conceptual integration of modern, marginalist economics and natural-law political philosophy into a unified moral science: libertarianism.”

This book applies the principles of this “unified moral science” to environmental and natural resource management issues.

The book started out life as an assigned reading list for a university level course entitled Environmental and Natural Resource Economics: The Austrian View.

As I began to prepare to teach the course, I quickly saw that there was a plethora of textbooks suitable for universal level courses dealing with environmental and natural resource economics. The only problem was that they were all based in mainstream neo-classical (or Keynesian) theory. I could find no single collection of material comprising a comprehensive treatment of environmental and natural resource economics based on Austrian Economic Theory.

However, I was able to find a large number of essays, monographs, papers delivered at professional meetings and published from a multitude of sources. This book is the result. It is composed of a collection of research reports and essays by reputable scientists, economists, and legal experts as well as private property and free market activists.

The book is organized into seven parts: I. Environmentalism: The New State Religion; II. The New State Religion Debunked; III. Introduction to Environmental and Natural Resource Economics; IV. Interventionism: Law and Regulation; V. Pollution and Recycling; VI. Property Rights: Planning, Zoning and Eminent Domain; and VII. Free Market Conservation. It also includes an elaborate Bibliography, References and Recommended Reading section including an extensive Annotated Bibliography of related and works on the subject.

The intellectual level of the individual works ranges from quite scholarly to informed editorial opinion.

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About Land & Livestock Interntional, Inc.

Land and Livestock International, Inc. is a leading agribusiness management firm providing a complete line of services to the range livestock industry. We believe that private property is the foundation of America. Private property and free markets go hand in hand—without property there is no freedom. We also believe that free markets, not government intervention, hold the key to natural resource conservation and environmental preservation. No government bureaucrat can (or will) understand and treat the land with as much respect as its owner. The bureaucrat simply does not have the same motives as does the owner of a capital interest in the property. Our specialty is the working livestock ranch simply because there are so many very good reasons for owning such a property. We provide educational, management and consulting services with a focus on ecologically and financially sustainable land management that will enhance natural processes (water and mineral cycles, energy flow and community dynamics) while enhancing profits and steadily building wealth.
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