Historically speaking, cattle futures have fallen in October a little less than half the time (since 1978), with an average decline of 3.8%. This year, cattle futures fell by double that amount; but relatively speaking, that wasn't so bad. After all, crude oil and gold futures got absolutely clobbered this month, falling by 32% and 18%, respectively.
November could be different. From a seasonal perspective, cattle supplies usually decline, while demand for beef tends to increase as the holiday season commences. And if the nation's stock market does recover from its October crash, it could give a big boost to demand; for consumers are usually more willing to buy more expensive meat when they feel their wealth is increasing.
This past week, cattle futures did jump by more than 5%. Can the rally continue? What does history suggest?
Q: What has happened to December Cattle futures when its price declines during the month of October?
A: In the immediate week following, prices have rallied as little as 25% of the time. However, that weakness has not continued, and prices have gained by 92% and 75% of the time by the end of weeks two and three.
For more Market History go to www.markethistory.com
Robert J. O'Brien Jr. is President of County Cork, LLC, a Commodity Trading Advisor (CTA) based in Skokie, Illinois.
