Why NWS Sparked A Cattle Market Rally

An article by Tyne Morgan on Drovers

For weeks, cattle markets had been bracing for the inevitable. As New World screwworm moved closer to the U.S. border, rumors swirled and anxiety built across the cattle industry. So when confirmation came Wednesday night that New World screwworm had been detected in the United States, many expected another sharp selloff in cattle futures.

Instead, the market rallied Thursday.

The reaction may seem counterintuitive, but according to Abby Greiman, livestock market advisor with Ever.Ag, much of the bad news had already been priced into the market.

“We’ve been kind of on a downward slide,” Greiman says. “There had been a little bit of technical weakness, some concern about cutout prices and not seeing a seasonal rally yet. We had a few days in a row of cattle prices moving lower.”

Greiman says traders had spent days digesting the growing likelihood that New World screwworm would eventually reach the U.S.

“I think market participants got to a point where it felt like there had been enough negativity priced into this market with all the rumors flying around and the knowledge that it was getting closer to the border,” she says.

For the full article click here