By Cassie Fish,Â CassandraFish.com
During the thinly traded pre-8 a.m. trading hours, CME LC cattle futures gave late-comer bulls a gift and sold off over a buck, while heartening bears who could Tweet about the possibility of another reversal. For old bulls, those that have been around for this patience-testing remarkable run, itâ€™s time to take the deepest seat yet.
This bull market may be long in the tooth, but it continues to make history and history-making commonplace. Spot Oct and most active Dec LC have both made contract highs and all-time highs this morning.
Â Â Â Â Â Â Â Â Perception Versus Reality
Sometime there is no fading the news. Sometimes, even in todayâ€™s world of electronic trading, high frequency traders, every kind of committed trading arrangement between packer and cattle feeder resulting in less competition and a great deal less transparencyâ€”markets still prevail.
On June 25, â€œThe Beefâ€ featured the Black Swan theory put forth by Nassim Nicholas Taleb in his book, The Black Swan, The Impact of the Highly Improbable. To recap, Taleb submits that humans concentrate on what they know and fail to take into consideration what they donâ€™t know. The result, according to the author, is the difficulty in in truly estimating opportunities.
If it were up to some traders and not to the market itself, the lights would already have been turned out for this bull party. But the marketâ€™s job of price discovery is still valid. And plain old supply and demand still valid too.
The fundamentals have been discussed, crunched, disputed, argued, ignored and embraced this year. Mostly though, this particularly exceptional set of fundamentals have taught cattle and beef tradersâ€™ humility and that history is no road map when a paradigm is truly shifting. The numbers themselves and our perceptions about those numbers have only gotten us so far, while reality, especially the discovery of the unexpected inelasticity of beef prices, has been the real driver.
It certainly might seem with Oct LC over $41 higher than November 2013 and $14 higher since the Black Swan blog post ran June 25 that the bull market must be getting close to concluding. But then again, thatâ€™s just the application of what we think we know. Not the examination of what we donâ€™t.