Cattle Call by Scott Varilek: Speechless
We continue the downward spiral leaving the cattle industry in fear. None of us know how far the futures can sink making all marketing decisions impossible to derive. Many rumors float around throughout the trading session, but the fall is bigger than anyone anticipated. Currently we are eclipsing the larger than 25% correction in the April live cattle futures.
Additional worries circulate as rumors of a worker or workers at a hog packing plant contracted the coronavirus. Actions taken at this facility will be closely monitored as it may be just the first plant in this scenario. The ability to maintain slaughter capacity is of the utmost importance with our bottom lines being pushed to the maximum already.
Trading strategies have been challenged with the large increase in volatility. Option prices soared and rarely trade when markets reach limit down levels in the futures. Limits on contracts have been expanded and will remain expanded until the market does not settle in a limit move. The cash market remained positive to the futures shedding the only positive light on matters.
One can only try to keep his head up while we are in unprecedented territory. This has never been seen before so making decisions can be extremely stressful. I hope that you can just keep yourself with the ability to make a move when the dust finally settles. Turn to the right places during trying times and continue to pray.
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.
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At first glance, 2022 cattle prices are higher than 2021. At $140, slaughter steer prices are 17.5% above 2021 prices, but even with higher prices, farmers and ranchers will travel a rocky road to profitability,…