Varilek’s Cattle Call: Screwworm

The biggest story of the week was screwworm.  After many rumors over the last year and a half, it finally landed in the United States. The case was on a navel of a calf in south Texas. Some felt it was a matter of time, and I guess they were right. Futures prices spun wildly with the uncertainty but finished strong during the Thursday and Friday session.

Consumer confidence in beef is the main worry for me when it comes to the worm. So far, there is no sings of a bull back on demand. We all use google now to learn when we are uncertain. If you use that platform, it will list there is absolutely no risk to eating beef. That is my hope to a better way for people to find the hard facts. Years ago, swine fever brought pork demand lower, but that was before consumers could just google it. Maybe that is a dream, but it is what I do most days. It might be a shock to some of you that I do not know everything.

What will the government do to try eradicate the screwworm? Many countries live with it. Will we have to adjust? My fear is we see some restrictions that could hamper movement of cattle. From a packer standpoint, maybe that is way they came in with good bids for fed cattle Thursday and Friday. They may want to get cattle bought now in case problems arise. The news is changing fast and algorithm traders are having a hay day with the volatile markets. It makes getting protection a challenge. Are you a hedger or are you not? That is my advice when looking into a trade on the futures. Have a good week.

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.