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The futures market outlook?

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Mike

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March Feeder Cattle stuck in the middle of a 5 month trading range with a high near 105 and a low of 95. Long term view is looking for Cattle prices to head for historical lows this year. Canadian Beef should begin showing up in the United States soon and Canada has a record amount of Cattle they need to do something with. Brazil and Australia are becoming major players in the export market and have huge if not record inventories as well. If major exporters have near record supplies is that not a sign that demand is soft or is production running too high. Is the world going to wake up to the fact the USDA testing methods for Mad Cow (BSE) here in the United States are pathetic when compared to how the Asian and European countries test their cattle. The U.S. Cattle industry would love to see the borders be reopened to Japan because before the ban the U.S. exported 1.4 billion dollars worth of cattle to Japan. Japan tests every cow for human consumption and the USDA test nothing when compared to Japan, who would want U.S. cattle?


I FOUND THIS TO BE AN ODD SYNOPSIS OF THE FUTURES MARKET!
From Fxstreet .com
Mike[/b]
 

agman

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March Feeder Cattle stuck in the middle of a 5 month trading range with a high near 105 and a low of 95. Long term view is looking for Cattle prices to head for historical lows this year.

Whoever made this statement knows very little about the market. Lower prices, yes, record lows, no. The U.S feeder supply while at a cyclical low and increasing modestly is still nearly 6.0 million below the peak total recorded in 1996. Fed cattle supplies are backlogging due to weak domestic beef demand. Adverse winter feeding performance has reduced beef production and masked the weaker beef demand. Carcass weights are manageable at this time but will begin to increase as the weather improves. The backlog is not as serious as in 1998 and 2001-2002. A normal price decline fom a winter/spring hight to the winter/fall low is 16%. A normal brak from $93 would establish a target price of $78. The weaker demand may cause the low to be as low as $74 which is within the parameters of the aforementioned seasonal decline. Have a great day.
 

Murgen

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AGMAN- Question? There was a backlog in 1998, what caused the continued increase in calf price that year? And in subsequent years until 2001-2002?
 

agman

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AGMAN- Question? There was a backlog in 1998, what caused the continued increase in calf price that year? And in subsequent years until 2001-2002

Do you remember $5.00+ corn in 1996? That put the low in feeder and calf prices. Each $1.00 per bushel decline in corn prices adds approximately $40 per head th the value of a feeder or calf. Peak feeder and calf inventories also occurred in 1996 and trended lower until the fourth quarter of last year. With the cyclical low feeder supply in place what would you expect feeder and calf prices to do now? Learn to use this information to your advantage. Have a great day. agman
 

Murgen

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AGMAN-Forgot about the corn price in 1996. answer to your question, I'd do something different from the crowd. I think the typical thing now is to increase the number of heifers held back? What is the expected number of replacement increase this year and next? My way of thinking is that you would have to minus the replacements from the number expected to cross the border into the US, to get a true picture of what will happen to calf/feeder price, without looking at just the total number of imports expected. Then looking at futures, you could play this out a little more.
 

Sandhusker

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You've got to take any market prediction with a fat grain of salt. I've found that there is not one single analyst who can tell what any market is going to with any regularity, whether it be stocks or commodities. Not one.

I take that back, Warren Buffet is the only person who KNOWS what the markets will do. When asked if he knew what the stock market was going to do for the next few years, he nodded his head and said, "Yes, I do know what the market will do. It is going to fluctuate."
 

Murgen

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Sandhusker, I guess that depends whether you're talking short term from week to week or the long term. I don't think anybody has proven the law of supply and demand wrong yet over the long term! My opinion is that the majority follow the trend, (that's what makes it a trend) So, by doing something different, there's more chance of benefit. Like they say, buy low, sell high!
 

whiteface

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While I do actually like your thinking, Murgan, consider this: You have a higher payout on a "long shot" horse at the track because his "odds" are so poor that he will win the race. Sure, it's a huge payoff if he wins but his "odds" of winning are based on his track record. Why would you bet on a horse that has so little chance of winning?? Because you hope for a huge payoff and then curse when he doesn't win even though the facts were right in front of you that you shouldn't go there. People follow crowds because very seldom is there a real opportunity that "no one" has discovered yet.
Just a thought...
Have a good day all and thanks for reading from Canada.
 

agman

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Murgen said:
AGMAN-Forgot about the corn price in 1996. answer to your question, I'd do something different from the crowd. I think the typical thing now is to increase the number of heifers held back? What is the expected number of replacement increase this year and next? My way of thinking is that you would have to minus the replacements from the number expected to cross the border into the US, to get a true picture of what will happen to calf/feeder price, without looking at just the total number of imports expected. Then looking at futures, you could play this out a little more.

The heifer retention you mention is already calculated into the available feeder supply. That is not news. The U.S supply of feeders is already increasing without any imports from Canada. Imports will only add to that supply. There is a clear statistical and measurable supply/price relationship with feeders. Supply goes up, price goes down if all other factors are equal. Have a great day.
 

Murgen

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Whiteface, don't give out my secrets for horse betting. Sure shot will only give a min. payout, if I can afford to take a risk, I'll do it ever time, and not complain if I lose. Payouts are greater with greater risk. Hasn't hurt me in the stock market yet!
 

Murgen

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AGMAN, how is the feeder supply increasing with a higher heifer retention and a lower population of cattle in the US. Thnks
 

agman

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Murgen said:
AGMAN, how is the feeder supply increasing with a higher heifer retention and a lower population of cattle in the US. Thnks

Total cattle inventories in the U.S. are up 1.0 million head. Feeders and calves outside feed yards are up 465,000 head as of Jan 1. Herd rebuilding started last year. Have a good day.
 

whiteface

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Murgan, I purchased my farm with the stock market and have had the thrill of large payouts with horse raceing as well...sorry about giving out all the secrets!!! I so know where you're comeing from! Hey! How was your skiing trip in Sunshine, did you get to Randy's place?! Sure haven't seen much of him here unless he's "hiding" as a "guest." Have a good day from Canada!
 

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