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Live Cattle: A Cure for Mad Price Disease

What seemed like "no rhyme or reason" to most investors had BOTH

by Nico Isaac
Updated: March 22, 2017

Let's be honest. While most of the world cares very much what they pay for beef at the grocery store, we don't give two hooves about the live cattle futures market. It just doesn't have the cache of the larger commodity contenders like say crude oil or gold.

So when you see headlines about live cattle on the front page of national news networks, it's a big deal. Like, bovine-size.

This is exactly what happened last summer. At the time, live cattle futures had undergone a history-making crash to five-year lows that none of the usual authorities could account for.

The situation was so dire, in fact, that the Chicago Mercantile Exchange refused to list new contracts until order of some kind was restored to price trends. Here, the August 18, 2016 MarketWatch sums up the scene:

"It's madness... The free-falling over seven weeks this spring represents a more than $10,000 drop in income for a single contract. It's just not worth the risk anymore, when there's no rhyme or reason to these price swings."

But what seemed like madness to some, was, in reality, the logical fulfillment of our senior commodity analyst Jeffery Kennedy's long-term live cattle outlook.

See, at the start of 2016, Jeffrey unpacked his Monthly Commodity Junctures 2016 Commodity Outlook for live cattle and wrote:

"This is a very exciting market.

"Short-term, say over the next two or three months, my focus will be up to 137.87-139.15 and then thereafter, we're going to expect the resumption of the larger downtrend which would push prices down into this area between 105 and 100. I think that's going to be a very attractive objective for the initial decline."

Live Cattle Chart

What happened next?

In his December 2016, Monthly Commodity Junctures' Year End Review video, Jeffrey revisited his long-term outlook for the live cattle market. To watch the clip and find out what happened, login or sign up to become a Club EWI member below.

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