Cattle futures exploded to a six-month high this week on the heels of strong cash market demand and hope for more agricultural exports to China.
Since early September, December cattle futures have risen more than 20% to trade Friday over $1.19 per pound.
Market watchers warn that the rally has been driven by investors, who have been rapidly buying cattle as the price advances. If these traders change their minds and start taking profits, they could cause a stampede back out of the market, creating a veritable slaughter.
For ranchers and cattle feeders, this rally has been a blessing, but if their newfound profitability isn’t protected, it could dissolve as quickly as it appeared.