I understand that. Life needs water, obviously. I haven't heard about any cattle dieing from lack of water however. When Tyson complains about losing $70m in the 4th quarter, I'd attribute that to cattle being correlated with the huge drop in oil.... not a shortage of water, not "unprecedented volatility" caused by HFT. Thats all I'm saying.
they didn't die because they were sold off at depressed prices because there was no grass, and grass needs water. Until grass starts growing again (and that requires water) the price of oil means little to a rancher other than lower fuel price is always better if it doesn't reflect lower demand. It's not just cattle ranchers, you would think trucking would be thriving with the lifeblood of that industry being sold cheap. But what good is cheap fuel if freight is down? I suppose you could bet that when oil goes up cattle will go up, but if no water, the rancher now is only paying more for the same fuel to raise fewer cattle. If you are just betting that when oil goes up demand will go up or when demand goes up oil will go up, then yes, welcome to the crowd. But cattle are not as elastic as they use to be when everybody expected to eat beef three times a week. How often do you eat beef? How much has the price of oil affected your beef consumption?
The grocery store price hasn't seemed to change with the drop in cattle prices. Anyway, I dont want to argue with you. I think we are both right in this case. We have been in a drought for years, so I would have thought that is priced in... but maybe not. Like I said, I don't follow cattle price, other than the price of T Bones.
=> 100 days correlation of variation since 2006 are very low I think oil & gas is around 20 % of the cost of a farme producing wheat, corn or soybean