Varilek’s Cattle Call: Argentina news causes pause

It was a whiplash week with headlines spinning the markets. We finished higher Friday, but the direction has been wildly sideways. The next money will be important with a seasonal spring rally possibility.

Thursday was a sharply lower day after the union in the Greeley, CO plant voted to strike. They did not walk off on the spot, but it sent the market limit down on the open. Currently the north is shipping cattle to Cactus, TX due to tight supply. The packer might not even care to act quick with the tight cattle supply. That is just an opinion, but with spring demand around the corner, a plant might not want to be closed.

Immediately after the close Thursday, packer bids started to pick up.  The north was bid $240 and it was passed. We ended the week with $241-245 cash in the north and $245 in Kansas and Texas. It is only the beginning of February with seasonal cash highs happening in the first or second week of March. There are some things to love about cash. Numbers are tight and demand is good. The only downfall is the large carcass weights for leverage.

Finally, Friday was a rager to start the day. The high cash shot the board up immediately, but was met with a slip from the highs after a political issue. President Trump signed an executive order to quadruple the amount of beef we import from Argentina.  It was talked about doubling, so the quadruple was the surprise.  It was still a small number in perspective, but the market took a pause. It is no secret that we intend to import a lot of beef. It is unfortunate that beef being too high is still in the news. The price of everything went too high. Let the market fix itself in my opinion. 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.