![]() ![]() These costs are normally “priced in” to the market and have a positive or negative influence on asset values.įor beef producers, there are two primary sunk costs that can affect cattle futures prices: Feed Costs Whether cultivating crops or tending to livestock, the sunk costs faced by ag producers influence the relative price of the underlying commodity. Also, societal factors such as changes in population size and dietary trends can greatly influence demand. From an economic standpoint, income levels and the price of protein substitutes are key drivers of beef demand. The consumption of beef hinges on many factors, both economic and societal. exports went offline because of the contagion. In the immediate aftermath of the outbreak, cattle futures prices fell nearly 20 percent over five days as U.S. During the 2003 outbreak of mad cow disease in the U.S., it was estimated that the country’s beef industry would lose upward of $2 billion from the fallout. The onset of disease is a major cattle market driver. In either case, supply is negatively impacted and cattle futures prices are positioned to rise. Also, extended periods of bad weather pose logistics challenges, limiting deliveries to market. Exceedingly cold or wet winters can hamper animal weights and cause untimely deaths, thereby decreasing herd strength. Inclement weather is one of the most important considerations when addressing the beef supply. Here are three key factors that may significantly impact the supply-demand curve for cattle: Weather Generally, prices rise when demand grows or supply dwindles disproportionately, and price tends to fall when demand slips or supply grows. Supply and DemandĪs with all commodities, the ongoing relationship between supply and demand plays a big role in the cattle futures markets. Let’s take a look at three key drivers of cattle futures prices. Two of its premier offerings are live and feeder cattle futures. From grains to livestock, hedgers and speculators alike have access to a diverse array of alternatives. The Chicago Mercantile Exchange (CME) offers a variety of agricultural futures contracts for public trade. ![]()
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