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Cattle bubble like housing bubble?
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<blockquote data-quote="SRBeef" data-source="post: 763334" data-attributes="member: 7509"><p>TB makes good points above. The basics of the cash cattle business in the US are very sound, regardless of what happens in Europe (USC I think you worry too much!). There are and will always be ups and downs on all agricultural markets. Just part of the natural cycles of agriculture, weather, etc.</p><p></p><p>However, we do need to be very aware of what can and may happen due to speculative money entering (and sometimes quickly leaving) the cattle markets futures, options, etc. These folks are in cattle to make a quick buck - and often do - regardless of fundamentals and realities. They have no interest in production or end uses nor who or how they take money from. They look for ways to make the market move and to profit from the movement.</p><p></p><p>The recent "Flash Crash" in the stock markets in May could happen in the cattle futures and options markets. Here is a link to a Reuters article that describes what happened in the stock market and how it is moving to other markets and other locations around the world. People moving their computers next to exchange computers so their trade gets handled first.... Personally I would suggest we individuals limit our exposure to this type of market manipulation.</p><p></p><p><a href="http://www.reuters.com/article/idUSTRE6595GO20100610" target="_blank">http://www.reuters.com/article/idUSTRE6595GO20100610</a></p><p></p><p>People tell me this won't happen in ag commodities because of daily trading limits. However those trading limits are wide enough for folks to make a lot of money riding them up and down. And that money comes from someone/somewhere.</p><p></p><p>I feel the cash cattle markets are basically very sound. One of the characteristics of the live cattle business is that thiings take a long time to really change much. Regadless of how computers work in nanoseconds, calves still take 9 months to be born and 15 months or so to reach market size after that. 2 years. That ime introduces a dampening on cycles which is a nuisance when you are trying to increase a herd but in the end also stabilizes the market to some extent.</p><p></p><p>We need to be aware of changes going on in all of the non-cash markets however. jmho.</p><p></p><p>Good topic.</p><p></p><p>Jim</p></blockquote><p></p>
[QUOTE="SRBeef, post: 763334, member: 7509"] TB makes good points above. The basics of the cash cattle business in the US are very sound, regardless of what happens in Europe (USC I think you worry too much!). There are and will always be ups and downs on all agricultural markets. Just part of the natural cycles of agriculture, weather, etc. However, we do need to be very aware of what can and may happen due to speculative money entering (and sometimes quickly leaving) the cattle markets futures, options, etc. These folks are in cattle to make a quick buck - and often do - regardless of fundamentals and realities. They have no interest in production or end uses nor who or how they take money from. They look for ways to make the market move and to profit from the movement. The recent "Flash Crash" in the stock markets in May could happen in the cattle futures and options markets. Here is a link to a Reuters article that describes what happened in the stock market and how it is moving to other markets and other locations around the world. People moving their computers next to exchange computers so their trade gets handled first.... Personally I would suggest we individuals limit our exposure to this type of market manipulation. [url]http://www.reuters.com/article/idUSTRE6595GO20100610[/url] People tell me this won't happen in ag commodities because of daily trading limits. However those trading limits are wide enough for folks to make a lot of money riding them up and down. And that money comes from someone/somewhere. I feel the cash cattle markets are basically very sound. One of the characteristics of the live cattle business is that thiings take a long time to really change much. Regadless of how computers work in nanoseconds, calves still take 9 months to be born and 15 months or so to reach market size after that. 2 years. That ime introduces a dampening on cycles which is a nuisance when you are trying to increase a herd but in the end also stabilizes the market to some extent. We need to be aware of changes going on in all of the non-cash markets however. jmho. Good topic. Jim [/QUOTE]
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