Sure enough, cattle futures were off 33 to 167 points today, as futures traders needed to create volatility in the market to generate commissions--just as this blog said they would last week.
The same market conditions exist today, as did last week when the market was going higher: a shortage of market-ready cattle, overall cattle numbers down, strong beef sales and strong leverage held by feedlots. Feeder cattle were even up $1-$2 at the major Oklahoma City auction today. But a steady to modestly higher market, as such conditions would indicate, wouldn't create trading commissions.
So traders sold enough contracts to drive the market down, creating a situation where it then made sense for some to buy in--and generate trading commissions in the process. All according to form, and thoroughly predictable.
The basic strong fundamentals of the cattle market remain, and a few burbles up and down in futures don't take away from that. There are problems like high corn prices and other grain prices, drought and other weather events yet to happen--but the fundamentals are strong.
You'll drive yourself nuts watching every little up and down in the cattle futures. You have to watch and invest for the long term. And the long term looks good.
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