Friday’s collapse in CME cattle futures painted a bearish outlook that is being fulfilled today. Futures were clearly not impressed with Friday’s sparse, fully steady cash trade as spot Apr LC retreats to the lowest level in 10 days and some contract months slipping back below moving averages. Daily stochastics indicate there is a low way to go before the market is oversold and the $150 area certainly does not appear out of reach, especially since futures are comfortable continuing to trade significantly discount. The bear spreads are dominating and feeder cattle futures are losing to fats. All boxes seem to be checked for another break in cattle futures.
Packers Demonstrate Power and Resolve
There are some negative fundamentals influencing the overall outlook, in spite of a bullish supply scenario. The most powerful was the packers’ willingness to only kill 524,000 head last week. Such a small kill was a big statement, down 13k from week ago and a whopping 50k head from a year ago. Most telling is that last week’s kill was almost as small as the tiny 522,000 head kill 3 weeks ago.
Clearly, beef demand is not strong enough currently to incentivize packers to begin adding to hours as they typically do in March and with fed cattle supplies ultra-tight and excess industry slaughter capacity dealt with over the past 9 years, operating at this constrained level combined with the captive supply packers control is enough to impressively keep a lid on cash prices. Choice boxed beef prices ended Friday $4.36 lower than the prior week, and as is typical in March, better beef demand resides in the second, not first quarter of each year. Selling boxes in March is always a drag and apparently end users have a couple of bearish arguments to counter tight beef supplies, namely big pork and poultry supplies and the untouchable U.S. dollar aiding imports and slowing exports.
Here are a couple of charts that illustrate how these two bearish factors are hurting packer margins and in turn, cattle prices. The sky-high U.S. dollar and sluggish global economy is depressing hide and offal values, which garners most of its revenue from hide sales, many overseas. The second chart is that of beef 50s, or fat trim as it’s commonly referred to. Beef 50s are more impacted directly by cheap and plentiful pork than any other beef item.
Bearish Commodity Outlook Doesn’t Help
The high U.S. dollar and sluggish global economies coupled with large supplies of many commodities is keeping the pressure on commodities as an investment group, with major investment banks continuing to throw all the asset classes together, including cattle into a “sell commodities” pot.
Cattle futures will likely struggle this week and possibly into next as the effort will be again on attempting to break cash prices with futures likely to be brought up from the depths once again after straying too far from cash.
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Murray 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.