February 18, 2009
Short Cattle - Now.
"They won't stay here."
I think there is a strong chance the bottom is about to fall out of the cattle market. After moving sideways for roughly the past three months (maybe a normal pause after a 25-30 cent decline?) the last few days of trading have presented a look I believe portends a dramatic, perhaps fairly straight down, 15 to 20 cent collapse in prices. Furthermore, with cattle now dead on their lows, this is the perfect place to a assume this market is either ready to rebound, at a minimum for 5 to 7 cents, or, they are rolling off a cliff...In other words, this is also the perfect place to make the statement, "They won't stay here", and establish positions using the "2 & 1" strategy...
Without going into any great detail, even though cattlemen keep citing (for months on end now) "tight supplies", I think the current economy is totally demand disastrous for beef consumption and absolutely the LAST thing I would be expecting is for meat prices to be going up at the supermarket. The average American is hurting financially, scared to death and cutting back on anything resembling a luxury, which when compared to pork or chicken, is exactly what steak represents...nor are people flocking to restaurants...
Simply stated, although anything can happen in this stuff, the chart below looks poised to break down hard and my own intent is to aggressively try to go with it...
It goes without saying I may be dead wrong about everything I think here.
Give me a call if you are interested...and if you are, the sooner the better (or so I think).
Following today's dead low close, down 1.30 cents ($520) they simply look ready to go one way or the other...