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<blockquote data-quote="ManyHorses" data-source="post: 59286" data-attributes="member: 1016"><p>Actually a year ago in December 03 the August 04 contract was about 3 cents higher than the 05 contract is now... that's because the futures market was looking ahead to continued demand and short supply. But we can't compare 04 with 05 because the market is anticipating increased supply and possibly less demand i.e. the low-carb diet craze wearing thin.</p><p></p><p>While part of it is certainly due to the Canadian border reopening to live cattle imports, an consideration is the 'fear factor'... traders just don't know and would rather avoid supporting the contract at this early date. When the market is absent one side participation, the funds have a field day selling it down i.e. the grainmarkets coming into year end 05 with no demand news.</p><p></p><p>I don't know that we can compare Canadian boxed beef imports directly with Canadian live cattle... partly because it just doesn't work, and partly because of the numbers coming from Australia and South America. Anyway, a 3-4% increase in finished product could well take off something more than that 'on the hoof'... supply demand is not always linear.</p><p></p><p>Anyway, my approach is to err on the side of caution and hedge against lower cattle prices and higher feedgrain prices. With the holidays here, the funds should have covered their massive short positions and with the new tax year, we should experience farmer selling and still lower prices... </p><p></p><p>Thanks for asking... Richard</p></blockquote><p></p>
[QUOTE="ManyHorses, post: 59286, member: 1016"] Actually a year ago in December 03 the August 04 contract was about 3 cents higher than the 05 contract is now... that's because the futures market was looking ahead to continued demand and short supply. But we can't compare 04 with 05 because the market is anticipating increased supply and possibly less demand i.e. the low-carb diet craze wearing thin. While part of it is certainly due to the Canadian border reopening to live cattle imports, an consideration is the 'fear factor'... traders just don't know and would rather avoid supporting the contract at this early date. When the market is absent one side participation, the funds have a field day selling it down i.e. the grainmarkets coming into year end 05 with no demand news. I don't know that we can compare Canadian boxed beef imports directly with Canadian live cattle... partly because it just doesn't work, and partly because of the numbers coming from Australia and South America. Anyway, a 3-4% increase in finished product could well take off something more than that 'on the hoof'... supply demand is not always linear. Anyway, my approach is to err on the side of caution and hedge against lower cattle prices and higher feedgrain prices. With the holidays here, the funds should have covered their massive short positions and with the new tax year, we should experience farmer selling and still lower prices... Thanks for asking... Richard [/QUOTE]
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