Varilek’s Cattle Call:
It has taken our breath away how high cattle have traded. We saw contract highs for feeders and fats by the end of week following record cash trade once again. The uptrend did not end with the tariff war turmoil that rocked the outside markets.
Packers needed cattle and purchased cattle for $223 in the north and $218 in the south. Producers had the leverage again with tight numbers and a manageable showlist. Cattle that did not enter the week on the showlist were also sold with the 3rd week of significantly higher cash. It would be hard to pass $223 when you know the closeout is going to be a homerun.
With the less numbers, beef production in the United States is surprisingly steady. Carcass weights are up. It is no secret. The dollars are telling you to do so. With $223 live trade, you can afford to operate with decreased efficiency from fat cattle. It more than offsets in the end. If you put another 30 days on your cattle, you can take quite a bit less and make more money. It is hard to replace empty yards, so producers are electing to feed what they have longer. Overweight cattle could be what ends our fun, and it has been in the past.
However, with a steady production level to last year, it has to be the demand driving prices further alongside tight supply. High quality beef is still what the consumer wants, and the next generation consumer is on a high protein meat diet fad. Beef is great for you. Who knew…right? Of course we did. It is fun to see the success for producers and is well deserved. 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.
