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Cattle markets fell sharply during COVID-19 uncertainty, with LMIC economist Jim Robb citing a 6.7% rise in US beef production and heavier-than-expected weights and slaughter. He also flagged an oil price war between Russia and Saudi Arabia and a rising recession probability.
Heavier beef output and weaker demand expectations point to lower cattle prices and softer demand for feed inputs, while low oil prices add to macro uncertainty.
thefencepost.comRachel GabelMar 13, 2020After 37 past bearish macro events, Live Cattle moved a median -1.1% over 5 sessions (30% higher; middle half -4.3% to +0.4%), and -0.4% over 20.
After 27 past bearish macro events, Feeder Cattle moved a median -0.9% over 5 sessions (37% higher; middle half -3.7% to +0.4%), and 0.0% over 20.
After 565 past bearish macro events, Crude Oil (WTI) moved a median -1.4% over 5 sessions (41% higher; middle half -5.9% to +3.0%), and -0.5% over 20.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
Notes heavy beef production, oil price war and recession risk driving cattle markets lower on March 13.
Heavier beef production, oil price war and recession fears weighed on cattle demand expectations and sentiment during the selloff.
Cites COVID-19 uncertainty, heavy beef production and weights, the oil price war and recession odds as reasons for the sharp cattle market drop (supply and macro sentiment).
