Market reactions?

[stocky]

Just thought I would ask what everyone thinks the market direction will be come tomorrow morning after the mad cow positive test result. My thoughts are that the futures traders will take the board down to make their fortunes the way they did last time and there will be alot of over reaction and then it will level out and the basic supply and demand will take it where it is supposed to be, unless there is drought that affects the corn production----am curious to see what other thoughts might be. Here, the springer cows are off 100-150 this past week and the pairs 150-200 and the calves off 15-20 cents. I dont know how much of that is due to the mad cow rumor and how much due to the hot, dry weather.

 

[Angus Guy]

My take on this is the market will be down limit for one maybe two days then a slow rebound. I think most of the hit was done in the last two weeks. Seemed like traders were already building in protection.

 

[jt]

My take on this is the market will be down limit for one maybe two days then a slow rebound. I think most of the hit was done in the last two weeks. Seemed like traders were already building in protection.

that's what i would have thought too, which means that is not what they will do.. :lol:

when it comes to that type stuff, just do opposite of what i think and you will be alright.. :lol:

just looked, and the futures were actually up pretty good...

must have already been factored in??

jt

 

[jt]

just came back from the sale barn... didnt see many calves sell, but did see a few cows... and you would never know that anything happened ... all sold normal

jt

 

[stocky]

jt, that is great news. I am glad I was wrong about how it would open. either people are getting confidence in the safety measures and tests in place or they are just tired of hearing about mad cow and are going about their business. I know I am tired of seeing that same years old video of the holstein cow in England that is being shown every time the words mad cow are issued

 

[cherokeeruby]

Cattle Futures Trading Today:

August cattle posted a key reversal up on Monday and closed above the 10-day
moving average crossing at 80.06. The high-range close sets the stage for a steady
to higher opening on Tuesday. The daily ADX (a trend-following indicator) is
bearish signaling that sideways to lower prices are possible near-term. If August
extends this month's decline, the November low crossing at 78.55 is the next
downside target. Closes above the 20-day moving average crossing at 81.51 would
signal that a low has been posted.

August Feeders posted a huge key reversal up on Monday as it consolidates above
the 38% retracement level of this year's rally crossing at 104.42. The high-range
close sets the stage for a steady to higher opening on Tuesday. Stochastics and the
RSI are bullish signaling that sideways to higher prices are possible near-term.
Closes above the 20-day moving average crossing at 110.20 would signal that a
short-term low has been posted.

 

[Angus Guy]

Haven't had a chance to check the markets or read to read any analysis. So glad to here things haven't gone to the dogs, yet.

 

[TheBullLady]

I haven't heard if they've said where the cow is from yet. I have a sneaky suspicion it will be the infamous "Texas" cow. If it is, I look for the market to drop considerably.

But then, I've been wrong before! :shock:

 

[Cattle Rack Rancher]

Demand is driven by the end consumer and if you ask me, I'd bet that most city people who eat steak and hamburger are way too comatose to know whether you have 'mad cow' native in the US herd or not. Most of the ones I've met spend most of their time trying to plan what they are going to do for their weekends, what new styles to buy, and how much fertilizer they need to keep that front lawn green. I bet 'mad cow' isn't even on their radar. The things that are more likely to affect the demand for beef are factors like how expensive it is compared to pork or chicken.

 

[bwranch]

CRR,

Mirrors my thoughts exactly. The only exception would be if one of the movie stars like Meryl Streep gets on camera and sheds tears over the dangers of BSE. I was wondering if now Missouri is going to close the borders to Texas cattle? ;-)

Lee

 

[stocky]

In the long term, yes, it is driven by consumer demand. However the immediate reaction can be quite different. When the first BSE case was confirmed, the markets immediately nosedived. There was no dip in consumer demand. In my area, there was a mad rush on all the food stores to buy up the beef and the beef counters were emptied the first 2 days and it took several days to get everything stocked back. The market crashed and there was fear and panic. Then, when it was anounced that it was an imported Canadian cow, everyone breathed a sigh of relief and the markets went right back up, but we have never picked back 30 plus countries of export business because we still import poor quality beef and mix it with our own to make it edible and then sell it without labeling it as such. We probably wont pick up those countries until we label all imported beef as such and then those countries can choose to buy pure US beef or mixed origin beef, whichever they choose---not some pig in a poke. Our problem is that there is way too much money fighting the labeling, so they are pretending to go along with it but writing the rules so that it is impossible to comply to make the farmers fight it.

 

[bwranch]

I just still can't convince myself that labeling is going to really affect the acceptance of our beef ex-US. Why? Well, back to the discussion of public perception/disinterest. I don't believe BSE is a major concern for most consumers here in the US and I wonder how much of a concern it is for consumers in Japan, for example. I think it is more likely that the beef exports are a political pawn in the hands of the governments such as Japan who wish to manipulate the import/export quotas in their favor. Right now, labeling is the excuse that they may be using, tomorrow, they may find a new reason to put off resuming imports. To me, it is very similar to the process of getting the GMO beans and corn into Europe and South America. You can throw all the data and safety firewalls that you want at the problem, but until the governments involved feel that the trade benefits are in their favor (and not just the benefits from one particular product) they will continue to stonewall. Hope that this rambling made some sense, whether the reasoning is right or wrong.

Lee

 

[Cattle Rack Rancher]

Here's the one thing I know for sure. Any extra expenses that come up in the market will be fed back down to the producer. Let me tell you why. The producer is the only link in the chain that is a price taker. Everyone else is a price setter. If labelling becomes law and it costs a couple of dollars per side, that will just be that much less that the packer will offer the producer. Same as testing. If it is $40 a head, that cost will be born by the producer. From what I understand, in the US the price is getting to a point where demand will start going down because people will buy pork or chicken instead. The retailer and the packers are not going to lower their margins so again it is the producer that will pay. The big question is ' If the producer puts out the money to test for BSE and label the beef and get the mandatory ID program up and running, will they see a return for that on their bottom line?' I don't think so. Be careful what you wish for.

 

[jt]

crr...i figure it will be like everything else... the little man is going to get squeezed out somewhere down the line.

jt

 

[bwranch]

The producer is the only link in the chain that is a price taker. Everyone else is a price setter.

Well said. That's the nature of the beast we're dealing with.

 

[Oldtimer]

Scuttlebutt has it that the reason the markets are so strong ( even with Taiwan, Korea and Japan saying they will keep their markets closed) is that many in the industry think with this new case, the Canadian border will stay closed to any live cattle....USDA will be under more intense pressure from Congress, consumer groups, and cattle organizations to keep the border closed until they can answer a lot of questions and re-evaluate their whole BSE policy and testing....They have a big credibility gap to fill in first...

And closed Canadian border = less suppy and higher US cattle prices...

 

[Cattle Rack Rancher]

And closed Canadian border = less suppy and higher US cattle prices...

Actually that's wrong, imports of beef into the US have increased since the border was closed. Instead of importing from Canada, you are importing from South America and Australia. All this is doing is helping build their beef herds so you will have more competition when the Asian market opens up. All R-CALF has done is manage to push a few more jobs out of the US by shutting down some of the smaller packers. The reason why futures are higher is because the positive BSE test was already figured into the market and so far it seems to be a real non-issue with the American consumer. Good Luck.

 

[stocky]

Cattle Rack, that was what I was referring to when I was talking about the poor quality, cheap beef that is being mixed with the US beef and being sold as US beef. The South American beef, where there are no quality guarantees about anything they ship up here. We have no idea if they actually used downer cows or not and we do know they have high incidences of hoof and mouth and other diseases. I dont agree with all US farmers having to go through the id process that is being discussed, but I do believe that it is unfair for most everything that is imported into the US to be stamped from the country of origin except beef. I believe it would help the Canadian markets as well if beef had to be labeled that it came from Canada as opposed to Brazil. What is going to happen is that there is going to be a sickness that comes from South American beef, but it will be mixed with American beef and the anti-beef people are going to have a big time destroying our beef-consumer confidence. There will be no proof of whether the sickness came from South American beef, or US beef or Canadian beef, so this, too, will hurt your markets as well as ours. I still believe alot of the salmonella news that we get from beef comes from poorly handled South American beef. I hope I am wrong, just my thoughts

 

[Cattle Rack Rancher]

Two things:

#1: All beef that comes into the US from Canada is labelled 'Product of Canada' so there will be no extra expense to the Canadian cattleman from labelling in the US. I assume that would be the same for all the other countries that ship to the US. So the only expenses of Country of origin labelling would be born by the American producers as I mentioned earlier.

#2: If I remember correctly, a couple of months ago I saw a ruling by the WTO saying that product cannot be differentiated on store shelves. This was a case brought forward by the US and Australia against Korea. I'm pretty sure that the US would have a hard time getting COOL going as this would be the first roadblock and I don't know how they could be plaintiff and defendant both on this issue. Here's the article.

http://cattletoday.com/forum/viewtopic. ... ight=korea

 

[Oldtimer]

#2: If I remember correctly, a couple of months ago I saw a ruling by the WTO saying that product cannot be differentiated on store shelves. This was a case brought forward by the US and Australia against Korea. I'm pretty sure that the US would have a hard time getting COOL going as this would be the first roadblock and I don't know how they could be plaintiff and defendant both on this issue. Here's the article.

http://cattletoday.com/forum/viewtopic. ... ight=korea

CRR- My answer to you then is my answer today- all over the world beef is labeled on the shelves- Japan has been doing it- Taiwan is doing it etc. etc....
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CRR- You need to read a little more on GATT, the WTO, and the specifics with that individual case.... This was all hashed out during the USDA and Congressional hearings on the current US MCOOL law which goes into affect in 2006--WTO rules allow you to mark and label imported beef and cattle as long as all of it is marked evenly- that means imports from Canada, Mexico, Brazil and US meat will all be marked... But you cannot do like Korea did and selectively mark or set aside US beef- that is discrimination... As long as it is all treated the same COOL is legal and practiced by many WTO countries of the world already.........

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