Like most other commodities this year, cattle prices topped out over the summer (top volume February futures (CME.LC) hit a high of $117.65 on June 20). However, cattle prices have not been hit as hard as other commodities, falling only 25% compared to the 66% decline in crude oil.
Cattle prices bottomed a week before Thanksgiving (at $83.80), and since then have rallied 4.6%. That's not surprising, for you would figure that Americans might be a little tired of turkey, and might very well turn their attention to beef. Will it happen this year? The cash news this past week was a bit mixed — live cattle prices did move higher, but dressed beef prices took a hit. Maybe last week’s sharp rally in the stock market will help — Americans typically will buy more expensive beef when their wallets look a little fatter. On the other hand, cattle futures did fall from their highs and finish lower on in Friday’s abbreviated trading session. What will happen next? What does history suggest?
Q: What has happened in the past when, during November and after Thanksgiving, cattle futures end down for the day, but remain up for the week? Has it been a buying opportunity?
A: The rally has not lasted — at least in the following two weeks. Prices have especially cratered by the end of the first week and into the second week, declining 79% to 93% of the time.
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.
