Plant fire again?

Cash cattle traded firmer again to start the week with $111 live and $178 dressed. With packer margins still over $200 per head, the incentive was still there for big slaughter numbers. The boxed beef rally has been beneficial in keeping the feedyards current and moving additional cattle with the continued wide choice/select spread. Carcass weights showed a break of 5 pounds on all cattle for the week ending October 5 providing proof of the cattle movement.

Last week news broke of a small explosion at a Cargill packing plant in Kansas. The early rumors showed a possibility of only being closed for a few days, but cash bids were pulled by a few packers as the news circulated. Producers have had their fair share of plant fire news, but keep your ears open for additional information.

Talk of bigger placements for the month of October is said to be weighing on the deferred cattle contracts slightly. In my opinion, after consecutive months of lighter placements on the cattle on feed report and adequate summer grass conditions, the placement number should show a sizeable increase. The next cattle on feed report is scheduled for Friday, October 25 which will reflect September statistics.

The Friday break in cattle futures does not have me alarmed. The market rallied for the better part of a month so a correction can be viewed as healthy for traders to realign, in my opinion. With open interest breaking over the last month, it was not evident of the funds backing this move higher. Many traders are said to be waiting for a better opportunity to enter the cattle market. In other news, it is rivalry week for the Jacks and Bison so I will stick my neck out and take the Jacks by a field goal.

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.