The cattle markets traded sharply lower from the start yesterday and pinned themselves limit lower by mid-session. Nearby Oct live cattle synthetically traded another $1.00 lower (on top of the $3.00 limit) by day's end. A very weak spot cash cattle market has caught much of the finger pointing, and indeed that market is still a mess. But I'm now of the belief this is larger than simply a cash cleanup problem, rather the entire complex (fed cattle, feeders, beef) all in a major realignment back to reality after last year's blow-up to new all-time highs. As we've noted here before, herd rebuilding has begun and high prices for long enough have clearly injured beef sales and encouraged big imports. In casual conversation with a petroleum colleague here in the office yesterday, he says "that sure sounds like the crude oil market!" He's right... high prices have cured high prices. We'll be expecting another lower start this morning, pricing in the "additional" weakness implied yesterday afternoon. Do remember both LC and FC futures will be working with expanded daily limits today, $4.50 in LC and $6.75 in FC.
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