What was seen as a negative two weeks ago, the events in Japan have become a bright spot for live cattle futures trade. Despite the recent uncertainties, cumulative Japanese imports of US beef are currently up 286% compared to the average from 2007 to 2010 and it is expected that some portion of the beef supplies currently in the country will spoil thus creating a need for more imports. The market reacted positively to this along with higher boxed beef. Contracts were up near limit on Friday. Corn futures rose above the $7/bu mark on Thursday this week for the two nearby contracts. All ended the week still starting with a six though as contract prices slipped on Friday. Still, prices were up about 6 to 11 cents on the week as exports sales remain strong.
The cash cattle trade ranged from $120 to $125 and is basically leading the futures market higher. Demand for beef and pork is tremendous and our herds are not expanding to meet the demand. Livestock markets tend to be very inflationary so our ever growing monetary base and growing demand force prices higher. The US employment situation is looking better as well, which will only serve to increase demand further. Every day we are closer to the top, but in the meantime, don’t underestimate just how high the price of cattle can go. Be patient with hedges, and keep in mind that $150 August feeder cattle calls at $2.00 may look cheap in the near future.