Sort & Cull

Somewhere in the valley between the market's technical and fundamental peaks, lie traders, analysts, cattlemen and everyone in between. The day when the two facets appeared interrelated seems like a distant memory as algorithmic day-trading has taken the market by storm and, unfortunately, pays far less attention to the market fundamentals than what most cattlemen would desire.

Which perfectly paints the picture of Monday's trade. The market was off to a bullish start, trading higher upon seeing aggressive bids developing in the cash market on a Monday, which rarely happens. But then the market was abruptly rocked back on its heels and forced to scale lower once news broke about the Trump administration's plan to temporarily reduce tariffs on beef imports from Brazil following their meeting last week.

Which leaves everyone in the middle dumbfounded and asking the same question: What is going on?

While I wish today's complex wasn't robbed of the bullish rally it was looking like the market was going to have, unfortunately, emotional knee-jerk reactions and headline trading stole the show and robbed the market of its fundamental rally.

Cassie Fish, of The Beef Buzz, perfectly noted, "When you net out beef exports with beef imports, you discover it makes up less than 1% of all beef consumed by the U.S. consumer. The rest is produced in U.S. cow and fed-cattle packing plants. So, the decision by politicians to lower tariffs on Brazilian beef is political and will have a nominal impact on supply. Just last week, domestic beef 90s made an all-time high at $460/cwt, while imported beef values actually dropped the past two weeks. But we live in a time when over-simplification of complex markets is favored and rewarded."

If only the market was as simple as supply and demand, consumers, and the cattle needed to produce the beef those consumers desire; wouldn't that be the day? But unfortunately, that's not how the markets operate and headline day-trading isn't going anywhere -- even if it does rob the producer of profits and pad the pockets of traders.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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