The table below shows a few economic measures the nightly news has discussed in the past few months. Allendale has gone a few months back to give you a little context on how these numbers may have changed. It is no coincidence last week's break in CME futures and cash cattle prices, came at the same time as newly released job growth (or loss in this case) information. Job related data came out last week while the inflation figures (Consumer Price Index) are next and will be released on March 14. Though unemployment is not a problem at around 5% the change in job growth since the first of the year is an issue. On top of that, inflationary fears are here. Beef has historically been the "premium" protein and has historically seen demand fall during energy price rallies or times of economic uncertainty. Seeing the above information, beef demand "should" be falling right now right? Tomorrow we will show in our Allendale Wrap-Up what actually is happening and also explain the 2007 situation. We have noted before that 2007 beef demand was not impacted by energy prices or the sub-prime crises. Near term the trade reacted about as expected given the sharply lower cash cattle trade last Friday ($90 and $90.50). This week we are starting out with larger showlists. It looks like the Bears are running the show in the near term. New lows were made on Monday in the April and June futures. Having said all this news we have to note much of the break recently has been made on demand fears. Have we gone too far? While the nearby contracts are wallowing around, take a look at the October and December fed cattle contracts. We would advise starting a buy program there. We also like the fact that fundamentally with lower placements coming) it will support those contracts. It is interesting to note the June contract did not hold that double bottom at $92 that Allendale pointed out two days ago.
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