Demand is hard to measure in real time
Two years ago I wrote an article entitled Great Expectations about the cattle market. In the classic novel written by Dickens with that title, the main character's great expectations are continually dashed by real world experience. I wrote of cowboys expecting higher prices, the futures market promising those higher prices, “experts” almost guaranteeing those higher prices, and yet lower prices occurring at sale time. Instead of positive cattle feeding returns, which were expected at cattle placement, large losses occurred. However, is this the year those great expectations for positive cattle feeding returns will be realized?
I must admit that I was skeptical at the start of the year when I saw April Live Cattle futures priced over $90. I thought the market may be playing another cruel April Fools joke on cattle feeders, and that by April, $90 would only be an illusion. I believe in more than one Extension meeting, I said that in spite of a tight cattle supply situation, I would be surprised to see many cattle sell for over $90 unless demand also improved. Perhaps my pessimism was born of unfulfilled optimism from the last two years.
To read the entire article, link here.