The Cattle Market catches the Flu.

Live cattle futures are trading at a sharp discount to what would be expected from 1) the USDA’s April beef supply estimates and 2) the beef supply – live price function established in the period of 2000 through 2019. The economic downturn because of the  virus quarantine is the dominant force in the market. In recent years there has not been a significant correlation between beef prices and pork and broiler supplies. But that may have changed as consumers search for cheaper protein alternatives in abundant pork and poultry supplies.

 In special situations like the present it is hard  to judge how far out of line with recent economic value is far enough to discount the sudden shift in demand. But we can say that June live cattle futures are trading at a 25% plus discount to normal.