Varilek’s Cattle Call: Tariff wars
It was another week to forget while tariff wars claimed the headlines. The stock market indices broke substantially, and cattle followed suit. Cattle futures have been correlated with the stock market significantly for the last 12 days. What ever direction the Dow Jones Industrial took, the cattle followed. Fundamentals were in the back seat, and money flow took over. It was a near 100,000 contract liquidation out of the open interest over the last few weeks.
We are all standing here feeling short of breath and that is rightfully so. It is the first time we saw limit moves with these large daily parameters for cattle. Panic ensued with the volatile daily trade and will highlight all trading decisions immediately. It comes down to, do you want to be hedged or not? Traders are dancing trying to figure out the flow. If you will instantly regret a hedge if the market goes higher, prepare to face that. If fundamentals win out, we might have some better days ahead. If the stock market keeps diving, beef demand could find some trouble.
The cash market felt ok with some $208 northern trade noted Wednesday-Friday, and the south saw some $204 live. Cash feeders saw some wild swings, but I did hear some very strong northern prices yet. Numbers are still tight, and the cash prices appeared to ignore the falling news all around us. Stay safe during farming season, and have a good week.
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.
