This is why commodity futures speculation is only for those with a very high propensity for risk and have a few “game tokens.” Even then, one should never “bet the farm.” Risk only an amount that, if you opened a window and threw it out, it wouldn’t force you to change your lifestyle one iota.
By Cassie Fish, CassandraFish.com
In what has become a too familiar pattern CME cattle futures ignored good fundamental news and sold off sharply yesterday, casting a bearish pall over a market thought to have established a seasonal low and was set to grind higher until the end of the year.
True, the market had gotten overbought but the rally had lacked luster, open interest refused to build and negativity and the trading capital from the global “commodity bears” spilled into the cattle futures market yesterday and took it tumbling down. Yesterday’s bearish USDA grain report may have meant 65 cent cost-of-gains for some cattle feeders this winter but it also tanked various commodity indices already weighed down heavily by cheap energy values.
CME cattle futures mean one thing to cattle feeders and meat traders but an entirely different thing to managed fund traders who believe the bleak economic circumstances in Asia and particularly China will keep pressure on commodities for many months to come. The velocity of computer-generated orders, the lack of transparency into the futures market all combine to keep old school cattle traders back on their heels, reluctant to stand in the way of the onslaught of fund selling. Also, fundamental cattle bulls are fatigued after many months of tepid rallies and treacherous breaks.
CME live cattle futures open interest yesterday reached the lowest level since 2009 as more conventional traders retreat to the sidelines. Fundamentals indicate cattle numbers will get shorter in the 6 months and it will be a year before the market experiences any kind of appreciable supply increase. But no matter, futures refuse to respond to anything but money flow. And certainly, the packing community is smart to let the pervading bearishness help their cause in buying cattle as cheaply as possible in a difficult business environment.
Cattle feeders are in a more difficult position than the packer at present. No short hedging opportunities. No attractive placement opportunities. And a futures market that is impacted by outside forces regularly and with dramatic impact.
Cattle futures used to be a reflection of what cattle and beef people thought of the market. A trader could have a relatively high degree of confidence when formulating a strategy and executing trades. Now the money flow and electronic trading platform have created an entirely different atmosphere that undermines confidence and sends traders and analysts scrambling to decipher if moves like yesterday and today are telling us something about our market- or not.
The crazy breaks seen earlier this year proved to portend nothing about where cash prices actually ended up trading. So is this time different or will the cash market once again prove to be more resilient than futures give it credit for? The 2015 cattle futures market has not the place to look for that particular answer.
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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.