Feeder Cattle

The panic of 2020 has agricultural commodities trading low on the traditional economic value studies. The accompanying scatter plots the average feeder cattle  price in the second quarter as a function the feeder cattle supply on January first. Currently futures are trading well below the regression line established from 2000 through 2019. Traders speculate that closing restaurants will have an adverse impact on beef demand. There likely will be transitory disruptions, but a bet that beef demand  will recover quickly this spring could be very profitable.

Note that a current point below the regression line indicates up side potential.