CME: Livestock and Grain Markets Rattled
US - CME's Daily Livestock Report for 6th October 2008.Livestock and grain markets were again rattled on
Monday by the unprecedented unraveling of global equity
markets. A tremendous amount of wealth is being destroyed
around the world as investors seek to reduce their exposure to a
potential global recession. Live and feeder cattle futures were limit
down on Friday, while lean hog futures were also sharply lower but
avoided a limit down close. The only contract trading higher on the
day was the October lean hog futures contract which is scheduled
to go off the board and thus is driven by the more immediate cash
market.
Grain markets were also sharply lower with both corn and
soybeans declining the daily permissible limit (30 and 70 cents,
respectively). There was plenty of talk in the market about large
players unwinding long positions in an effort to increase their liquidity.
The appetite for risk is disappearing quickly as many investors
are now clearly in survival mode, seeking to preserve
enough capital to “fight another day.“ The Federal Reserve is currently
considering an even more aggressive intervention in markets,
possibly purchasing short term commercial debt. Furthermore,
the FED has sharply increased the amount of funds available
through its lending facilities while other world central banks have
rushed to bring more liquidity to markets.
Unfortunately, these
moves have so far been insufficient to stem the deterioration in
confidence. Regardless of what economists think of the supply and
demand fundamentals in the livestock and grain markets, there is
little point to discussing “true“ price points when market participants
are more concerned with their immediate survival. In the
meantime, energy and feed prices continue to drop, which for some
livestock producers may present good opportunities to hedge their
feed needs. Difficult as it may be to focus on the tomorrow when
today seems interminably long, people will still need to eat and
business will go on. At least we hope so.

Further Reading
![]() | - | You can view the full report by clicking here. |