Cows Are Flying.

There's one commodity group down year-to-date: Livestock. Among the few items I haven't seen picked apart on the much debated CPI report about runaway inflation was the fact that nine different meat indexes were down in price year-over-year. Yes, the U.S. government officially tracks“Chuck Roast” and all its cousins. But you were told everything is going up?

Here’s the deal, ranchers were liquidating their herds not because they wanted to, at lower and lower prices, but because they had to. Their costs were going higher and higher.

Pressure on crops of cattle feed had supply so low that there was yet another clue hidden inside the widely discussed USDA planting report in March. Pasture land (for grazing herds) was turned into crop rows.

So what happens if tons of supply of cattle are taken off the market at the same time that, and this part might be the safest prediction I’ve made in my career, Americans decide they still like to eat? A look at the April 2009 Live Cattle futures contract, predicting a much different story than 2008’s falling prices. Cows are flying now!