Cattle overcome by outside economic factors

Another crash in the Stock Market today, despite yesterday's easy Senate passage of the bail-out bill, took cattle cash and futures trade into the tank.

Futures were massively lower, with January live cattle down the limit and other months sharply lower. This followed much lower cash cattle trade in all areas. Which came first, the chicken or the egg?

Fed cattle, both live and dressed, sold $3-$4 lower, although trade volume was low and some cattle could sell at higher prices Friday, traders said.

In truth, factors beyond the control of either futures traders or cattlemen, finally caught up with cattle prices. The credit crunch and lack of liquidity is undoubtedly limiting buyers of cattle, who notoriously operate on borrowed money. When you can't borrow, you can't bid and buy.

The Black Thursday for the cattle business sets up a likely Rally Friday scenario, as most such crashes are overdone, and there are bargains to be bought, as well as cash on the sidelines, waiting for the smoke to clear.

The conventional wisdom is that the 348-point Stock Market crash was a shot across the bow of the U.S. House of Representatives, warning them that they must pass the Senate's bail-out bill. It only takes a swing of 12 votes in the House for that to happen. It is likely because of sweetening up the Senate bill with an extension of tax credits and increasing federal deposit insurance from $100,000 to $250,000 per account, among other things.

The cattle industry could certainly take a little of that.