Cattle: Bull-ish Bubble

Food Crises II Cattle (CR)

40-Year Bull-ish Bubble

For centuries, the consumption of meat is associated with wealth & affluence.  The Old Testament book of Daniel describes the privileged captives being fed meat & delicacies from the king’s table.  In modern capitalist societies, there are two places to look for signs of economic prosperity – the (stock) market and the (food) market. The wealthiest are usually awash in steak & stocks… in filets and financials.  And no two markets have better reflected the inflationary-driven prosperity of the past 40 years.  Both are a bubble about to burst!

03-28-142014 is the climax of an inflationary-Stock Index 40-Year Cycle that began in 1974.  That has already been discussed2014 (possibly stretching into 2015) is also the climax of another ’bull’-ish inflationary move that has been described the past 5 years.  And this one fits precisely with the ongoing, 200+-year old, 40-Year Cycle of Food Crises – expected to take hold again in 2014–2016.

Bubble Bookends

The market in question – in case you did not pick up on the transparent pun – is Cattle (and Hogs).  It is the Livestock sector that is fulfilling long-term cycles – which reach a Major peak in 2014/2015 (and entered a crescendo in early-2013, when Hogs fulfilled multiple cycle lows that portended a multi-year bottom).

On a corresponding page (Cattle: Bull-ish Bubble – 2009 Analysis)  I have reprinted excerpts from 2009 – when Cattle & Hogs were projected to set multi-year lows and enter the next phases of acceleration in their multi-decade bull markets.  All of this has been expected to culminate in 2014/2015… as first described back in 2009…

Cattle & Hogs Confirming Cycle Crescendos

(Excerpt from 2009 analysis projecting overall advance into 2014/2015)

             03-31-09:  “Live Cattle did decline into a consistent 8-9-week cycle and bottomed on March 11th….the intra-year trends are projecting more downside into mid-year.  This – if it transpires – would dovetail with another very consistent cycle in Cattle… Live Cattle has maintained a very consistent 3-year and 6-year cycle for several decades. 

             Going back to 1973, Cattle set a peak and then declined for 3 years.  It then surged into 1979, 6 years later, and set a new multi-year peak.  Cattle corrected and then set a secondary peak – 3 years later (1982) – before dropping into 1985 and completing a 6-year decline.  This was followed by a 6-year advance – into 1991… followed by a 3-yeardecline into 1994.

             Cattle deviated from this cycle when it extended this drop into 1996 but then began a new bull market with an intervening bottom in 2002, 6 years later.  A 6-year advance ensued, into 2008, when an important peak was set.  This sets the stage for the next peak in 2011, 3 years in the future.

             However, within its 12-year bull market, Cattle set its initial peak in 2003 and never gave a monthly close above this peak (even during its spike high in 2008).  This ‘3rd wave’ peak in 2003 also completed a 12-year high-high-high Cycle Progression, connecting tops in 1979, 1991 & 2003.  This was followed by a volatile, 3-year period with an important low – a type of ‘4th wave of lesser degree’ – set in mid-2006.  3 years after this low – creating a 3-year high-low-low Cycle Progression – is mid-2009, when another bottom could be seen… 

             While it is impractical – and perhaps a little too ‘theoretical’ – to be looking this far into the future, the ideal cycle scenario (incorporating all of these 3, 6 & 12-year cycles) for Cattle would be to see a low in mid-2009, a rally into 2011 (3 years from 2008 peak), a drop into mid-2012 (3-year high-low-low-low Cycle Progression) and then a rally into 2015 (3-year high-low-low-low-high Cycle Sequence AND 12-year high-high-high-high Cycle Progression).”

             3-27-14 — For over a decade, since the 2003 highs were confirmed, Cattle cycles have looked ahead to 2014/2015 when a Major top is expected.  Longer-term cycles, including 6-year, 12-year & 40-year cycles – all converge in 2014/2015 and auger a multi-year top at that time.

As stated back in early-2009, Cattle was expected to set a low in mid-2009 (it bottomed in June 2009), rally into 2011, set a subsequent (ascending) low in mid-2012 (it bottomed in June 2012) and then surge into a major cycle climax in 2015Well… so far, so good!

(There is an almost-equal convergence of long-term cycles in 2014 – including a 6-year low (2002)–high (2008)–high (2014) and a related 3-year high (2008)–high (2011)–high (2014) Cycle Progression.  And, 2014/2015 is 40 years from the double-bottom of 1974/1975… so a multi-year peak could be seen in either – or both – 2014 or 2015.)

Hogs reinforced this longer-term outlook with a low in August 2009 (for the preceding 8 months, Hogs were projected to drop into June/July 2009, at which time a multi-year bottom was expected) and the ultimate blast-off expected after Feb. 2013.

They have a related, 6-year low (Aug./Sept. 2002)–high (Aug. 2008)–high (Aug./Sept. 2014) that dovetails with a 3-year high (Aug. 2008)–high (Aug. 2011)–high (Aug. 2014) AND a 1-year high (Aug. 2011)–high (July 2012)–high (Jul./Aug. 2013)–high (Jul./Aug. 2014) Cycle Progression – all coming into play in 3Q 2014.    IT

Watch July/August 2014!!  (…although a more significant cycle follows that one – in Nov./Dec. 2014).

The interesting thing is that Cattle is poised to experience a 2nd ‘bubble-and-crash’ sequence at the culmination of its 40-Year Cycle… just as it did during the inceptionof that same cycle.  1973–1975 was the first one with Cattle completing a 1-year surge of over 80% and a 2-year advance of almost 100%, before crashing into mid-1974.

A secondary low (double-bottom) was set in early-1975, ushering in a near 40-year period of steadily advancing prices.  Once Cattle broke above its late-1973 peak, the highs of 1973–1975 became a floor under prices for the next 3+ decades (resistance turned into support).

2014 completes a 40-Year Cycle in Cattle and could pinpoint the time for a MAJOR peak (the culmination of a bubble in 2010–2014 – in which Live & Feeder Cattle have advanced about 100%).  This 40-Year Cycle began with a bubble and could end with a bubble… like bookends.  If so, watch 2014–2016!

However, with the magnitude of this cycle and the 1975 double-bottom, I have to include 2015 in the discussion of when a MAJOR peak is likely.  So, 2014–2015 is a multi-decade cycle culmination – the likely peak of a ~40-Year bull market… in bulls.

That is corroborated by multiple cycles described repeatedly over the past decade, in INSIIDE Track & related Reports.  These include a web of 3-year, 6-year & 12-year cycles – all of which peak in 2014/2015 (so, more upside is still possible although Live & Feeder Cattle are attacking pivotal price levels; see very basic Feeder Cattle chart on page 4).

40-Year Cycle Madness

Looking back at Cattle over the past century, the 40-Year Cycle has been at work – in more ways than one.  And, as repeatedly described, it is often the devastating combination of natural events and man-made foolishness (madness) that exacerbates these major transitions.

One example has been in and out of the news for ~20 years (half of a 40-Year Cycle) and played a role in where Cattle are today.  To adequately understand this, we need to go back 100 years…

In the 1910’s, the British came up with this brilliant, cost-saving concept to make their herbivorous Cattle into carnivores – completely perverting the natural order of things – by feeding the rendered (boiled and ground-up) meat, bones, blood & organs of their dead and diseased livestock… to their live, healthy livestock.  After all, you wouldn’t want those diseased animals to go to waste.

This practice became widespread in the 1950s (40 years later), after World War II.  Like any disease, when it is in smaller proportions, it often goes unnoticed or is viewed as an anomaly.  And, the consequences of a forced perversion of nature – like this – often take several decades to play out.

Eventually, Canada also joined this ‘madness’.  In the U.S., other feeds remained cheaper than pulverizing diseased animals, so we simply decided to alter Cattle from being a grass-eater to being a corn/grain-eater (that has its own set of negative repercussions – that are still playing out).

On a very basic (overly-simplified) basis, the Mad-Cow evolution went from inception in the 1910’s to widespread acceptance in the 1950’s to ultimate culmination in the 1990’s… in 40-year increments.  However, as I originally stated, this was just one facet of the evolving bull market.

When discussing long-term, food crises cycles, it is important to recognize the interplay between multiple factors – and these fundamentals and the governing cycles. The 40-Year Cycle of Madness ushered in a different kind of madness… that also took multiple phases to play out… as incremental parts of a 40-Year Inflationary Cycle

Cattle embarked on its inflationary bull market in the mid-1970’s.  10 years later – in 1986 – the first confirmed case of BSE (Mad Cow Disease) was diagnosed.  10 years later – in 1996 – British beef was banned from the EU… for another 10 years.  10 years later – in 2006 – that ban was eliminated, setting the stage for a parabolic rise in prices in the ensuing years (as pent-up demand surged).

As this man-made supply/demand vacillation was unfolding, nature began to take its course.  The economic contraction in 2007–2009 coincided with the same time the Cattle herd in America began to retrench.  When the economy stabilized, however, Cattle ranchers had new problems to deal with…

A devastating drought in Texas – in Oct. ’10–Sept. ’11 – accelerated the herd decline.  In 2012, parts of the Midwest US suffered their driest year since the Dust Bowl(the UK also had drought) – pushing grain prices to never-before seen levels.  The exorbitant cost of feeding Cattle prompted more herd liquidation – further reducing the supply.

The challenges continued in 2013, when California suffered its driest year on record – impacting its beef and dairy herds.  And all of this has resulted in the smallest US Cattle herd in over 60 years.

            Could all these events have been anticipated in 2009 – when cycle analysis was calling for a major surge in Cattle prices until 2014/2015?

Probably not!  And that is why technical & cyclical analysis are so important… and so effective.

However, it is not just these major cycles in livestock that are worrisome for the coming years.  This is just one small facet of the over-arching, longer-term socio-economic cycles – including the 40-Year Cycle – that are in the parabolic phase (a Cycle Progression inversion – when the entire 40-Year period is from one extreme (inflationary low) to the opposite (inflationary high)).

As I illustrated last month, inflationary stock moves are one example and include the projected peak in 2014, the culmination of a 40-year advance originating in late-1974.

From a broader, economic perspective, that links economic depressions in the 1890’s & 1930’s – the two lowest points in a textbook Cycle Progression evolution – with an intervening low (following a 50% crash in less than two years) in 1974, the period that marked the onset of accelerated inflation.

That 1974 low triggered an entire 40-year inflationary stock advance into 2014, when a multi-year peak is likely.  However, it is not just stock prices that are expected to peak.  It is many commodities & inflationary markets.  And, as would be expected at the culmination of a full-cycle advance, these peaks are likely to be parabolic peaks in many markets.  Livestock is one of these.

Monthly & Weekly Cycles in Hogs Peak in July/August 2014;  Major Decline to Follow!Nov. ’14 & May ’15 = Cattle Cycles Converge… Major Peak Possible in late-2014;

Inflationary Parabolas (Stocks AND Livestock) Culminate in 2014/2015!  And then…

Cattle Bull – July 2009

Cattle Bull II – June 2011

Cattle Bull III – July 2013

Cattle: Bull-ish Bubble – 2009 Analysis