Beware thebig spread

摘要

When you ponder the current spread between live fed cattle prices and retail beef prices — extraordinarily wide for more than a year and record-large in June — two cautions come to mind.First, this spread is different from the Farmers Share of the Retail Dollar (FS) calculated by USDA. And neither statistic says anything about producer or retailer fortunes.Second, history suggests live cattle prices are atypically low relative to retail beef prices, meaning there could be a significant bounce that could wreck lots of bottom lines if hedged at current prices without protection.