Ask Questions Later

By Cassie Fish,

There have been many news stories in the past couple of days confirming that some dairy cows in the Texas Panhandle and southwest Kansas have contracted avian influenza (HPAI). The illness is being spread by wild birds, acts as a flu and tends to effect older cows. There is no negative impact on milk or meat produced. Milk is pasteurized. There is no threat to human health. The illness reduces milk production 10% to 20% which does impact the dairy producer negatively economically. The animal recovers after about 10 to 14 days. There is no need to destroy any cattle.

Regardless of the facts above, Chicago Mercantile Exchange cattle futures are under significant pressure as managed funds liquidate long positions due to uncertainty. Technically, charts look bearish as all contracts are lower on the month and live cattle contracts have posted an outside month with a likely lower close by Thursday, this month’s last trading day. Taking out the February low in March is never a good look for bull market.

As discussed yesterday, there are some cautionary factors that could indicate the spring cash fed cattle rally may have reached its apex. But there are no cattle or beef fundamentals at play in today’s massive cattle futures market sell off, only a deluge of fund selling and likely an increase in algorithmic trading activity. One would think the industry would get used to this action, but somehow, it never seems to.

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This material has been prepared by a sales or trading employee or agent of New Frontier Capital Markets and is, or is in the nature of, a solicitation. This material is not a research report prepared by New Frontier Capital Markets. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW.  PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS.  TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that New Frontier Capital Markets believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

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