Betfair Official Blog

The price of livestock hasnt been this low since the Black Death

Daily View - 6th March...

After the minor falls on Tuesday, the commodities markets went into overdrive yesterday with Oil, Gold, Corn, Silver etc all recording record highs. In the mass happiness for the producing parties involved, please shed a tear for the poor old pig and cattle farmers. Live Cattle and Lean Hogs, (traded in Chicago), have now fallen some 10% and 25% respectively since last summer, which with the increased cost for feed, energy, general inflation etc must mean that many meat farmers will now be selling their produce below the rearing costs.

Even though we have just had the bank reporting season, showing the big four riding high once more, fears of a major collapse in the financial system are at all-time highs. Many of the more accommodating banks of the past have had their capital bases shot to pieces and just do not have the leverage available to renew loans on anything other than penal rates.

The recent support in the markets is looking fragile this morning after the US-inspired rally yesterday has seen no major follow through in early Far East action. The FTSE is opening unchanged, but sellers are outnumbering buyers in early action by almost 2 to 1 on our books as clients take what profits they can from the positive day yesterday and start to set up shorts.

FX markets are hitting the dollar yet again as the Euro hits new highs against the greenback and Pound as sellers are run down in the one-way traffic. With the Fed likely to cut further and the BOE and ECB still worried about inflation, the poor old Dollar has few friends at the moment. Much of the recent strength in commodities can be laid at the door of the currency in which most of them are priced. In Euro terms, Gold is actually 30% lower than the apparent current value. With the pound either stuck to (or falling) against the USD, imported one-off inflation shocks can be expected.

Today's BOE decision should keep the markets quiet until then, but the speculation that the uber-hawks in the MPC will maintain rates at current levels makes equities look fragile and Sterling looks like the bet of the day. The Pound still needs to break and close above 1.9960 for a change in the current bear direction and today could be a good one for that to happen. If we fail again this time then that will make it three failures which is generally a pretty negative signal.