o/t cattle prices dropping?

1. Seasonal price decline. Supply of cows and calves on the market is higher in the fall as opposed to spring and demand is higher in the spring than in the fall.

2. Lots of extra cattle hitting the market out of drought affected areas of the US. These are the same areas that are net importers of stocker cattle out eastern cow states like KY and TN.

3. Corn price, as the price of corn goes up, the price of cattle goes down

4. Cow price cycle. We are in the expansion side of the normal price cycle of the cattle industry and are looking at several years of declining prices until herd expansion reverses.

I would argue a 5th indicator. The futures markets are looking much more bearish with the decline in energy prices and the economy beginning to slow. Stocks are up, and thats pulling cash out of the long side futures markets. Plus with corn so bullish in the next 2 years due to ethanol demand. I dont see anything pulling money into cattle futures and everything saying pull money out of cattle futures.

In other words, if possible, straddle both sides of the street.

Allan

Theres money to be made using the programs to your advantage (I've seen LDP's vary a nickle a day on wheat silage). I dont like farming the programs, something just feels dirty about it, but as long as they are in place I'd be a fool not to particpate.

• LDP