Cash cattle trade was sparse again this week with small numbers traded at $217-218 and $137-138 live. It was much of the same story as last week with buyers only able to buy a few from negotiated traders. Smaller daily slaughter numbers were evident with packers citing worker shortages with flu season mixed in with continued covid issues. Wednesday was a rally day for the futures possibly in anticipation of the worst behind us, but the rally was not sustained.
Traders are watching to find light at the end of the tunnel as daily slaughter data is printed. This is a futures market that I trade, and markets can bottom when the news is the worst or top when the news is the best. We can not complain too much about the break in futures with the December live cattle futures making contract highs this week in the upper $140’s. Feeder calf prices look to have a great year as well.
Feed costs are still a large question mark with the increased volatility, and inflation often in the front page of the headlines for funds. It will prove to be tough to get a good lock on your costs for the year. Spring is coming even though it doesn’t feel like it today, and the acreage battle will begin. To date the Midwest looks to be maintaining some dryer conditions, but that did not hold yields back last year.
Hog supply is making the protein news with empty slots in barns noted. Disease is creating a bigger hole in feeder pig supply than expected. You can feel the packers looking around a little harder for market ready hogs, and feeder pig prices are showing it with a higher purchase level. Getting pigs out of Canada will be an ever-growing battle with issues of getting truckers in the country too. Have a good week.
Scott Varilek, Kooima Kooima Varilek Trading
The risk of loss when trading futures and options is substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.