The cattle market is a fickle beast - cents per kilo can vary dramatically week to week.
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A little rain may influence things, but a lot of the time it seems to fluctuate for no reason at all.
That is because the market is not always driven by fundamentals, but is frequently driven by sentiment.
If graziers feel positive about the chances of rain coming, they will more than likely buy more cattle. This increased demand then pushes prices up. On the other hand, if their outlook towards rain is more negative, then fewer graziers buy, demand weakens, and prices generally go down.
The sharemarket is a similar beast. Substitute how people feel about the chance of rain, with how they feel about the economy and you have a market driven by similar forces - supply and demand.
Another factor that can affect cattle prices is something called 'social proof' - when the price of cattle goes up, graziers think "wow we better get in and buy some cattle as everyone else is buying and the prices are going to go up" or "graziers in the district are destocking or lowering numbers, I'd better do the same".
The same goes for shares. "Bill sold his shares as he is worried about the sharemarket going down, we'd better do the same" or "Mary is buying shares, she knows what she is doing so maybe we should do the same".
Social proof is technically described in Wikipedia as: "a psychological phenomenon where people assume the actions of others reflect the correct behaviour for a given situation... driven by the assumption that the surrounding people possess more information about the situation."
Social proof can influence myriad areas of your life, often without you even realising.
If a neighbour starts buying a different breed of bull or brand of tractor, chances are you will feel more comfortable following their lead.
Again, the same can be true for investing. The decision to buy an investment unit on the coast or houses in town is often because you see other people you know buying them either right now or sometime in the past.
While social proof is a handy tool if you get your proof from the right source, however when it is from the wrong sources it can be financially disastrous. It pays to be careful who's lead you follow.
I think the best way to put it is, if an eagle surrounds itself with turkeys it is never going to get out of the chook house.
