Cattle Market Faces Steep Decline as Brazil Seeks Beef Trade Talks with U.S.
There’s a decades-old adage in the commodity trade that says, “any bull market takes the stairs up, but it takes the elevator down in a hurry.” That phrase has proven true once again in the cattle trade, as recent market activity shows a steep and sudden decline in prices.
“Speculators, fund traders, and others have clearly seen enough as we see evidence this week. And now, feedlot operators are holding high-priced feeders with positive hedging opportunities now gone. We hear that feeder auction markets this week some $30 to $40 lower than a week ago.”
The sudden pullback follows months of aggressive buying in both live cattle and feeder cattle futures, as investors poured into the market expecting strong demand and tight supplies. However, as economic uncertainty, feed costs, and seasonal trends take hold, traders are now rapidly unwinding positions — sending prices tumbling.
Adding to the market turbulence, Brazil is reportedly sending a trade delegation to Washington, D.C., in an effort to restart the flow of Brazilian beef exports to the United States. Such a move could introduce additional downward pressure on U.S. cattle markets by expanding available beef supply in North America.
“And Brazil is sending a trade team to Washington to try and restart the flow of Brazilian beef to the U.S. And just as futures markets in the past few weeks likely overshot it on the upside here in the cattle and feeder cattle trade, history shows that sellers will likely overshoot it on the downside when all is said and done. This is the Bottom Line report.”
As of late October, December live cattle futures are approaching a 52-week low just below $180, a level not seen since Thanksgiving last year. Meanwhile, January feeder cattle recently neared its 52-week low of $256, set back on February 12.
While some analysts believe the market may have overreacted to short-term conditions, volatility remains high. History suggests that when markets swing this sharply, a correction in the opposite direction may eventually follow — but for now, the cattle sector is feeling the full weight of the elevator ride down.
Audio Reporting by Mark Oppold for Southeast AgNet.