Wholesale beef prices, futures going bonkers

Cattlemen should remember the old saw "whatever goes up, must come down." Again today, futures were up strongly, prodded mostly by smartly rising wholesale beef prices,

It's said to be a part of a broader trend in the financial world, of capital rushing into commodities to offset rapidly rising oil prices. As the stock market has fallen in response to oil prices, investors have flocked to commodities instead, which allegedly are more stable and backed by the actual commodity itself.

Try telling that with a straight face to most cattlemen. Outside of the huge packers and feeders with enough capital to corner the futures market, futures are hugely unpopular with most cattlemen, who feel the whipsaw, zipzag effect futures have on cattle prices. It's because too many buy an "Oklahoma Hedge"--with 1,000 head of cattle on the ground, they buy contracts on 2,000.

Futures traders encourage this, because they work on commissions, and don't care whether the market goes up or down--just so it's volatile, to generate lots of buying and selling--and commissions.

In truth the futures are highly speculative, and are probably near a crash. Wholesale beef will be high a few more days, as the last of July 4 holiday orders are placed and processed. But soon it will be in for are major correction too.

To read all the breathless commentary from traders and analysts, you'd swear there'll never be another dark day in the cattle business. In truth, there's probably one right around the corner.

All that will keep it from being a major depression is that cattle numbers are very low, and supplies very tight. Yearlings are hard to come by, the calf crop is smaller, and they're culling cows like crazy because of high grain prices.

Ho hum. Just another day in the cattle business . . .