Varilek’s Cattle Call: Boxed Beef Higher
Boxed beef prices have rallied for 17 days with a price over $320 for choice product. Packer margins move strongly into the green again with labor issues and excellent demand noted. Cash cattle prices remained steady with light volume and low packer participation. Prices were seen from $203-204 dressed for the north by a regional and $198 from majors. Many feedyards are threatening to close the gates with desire for more of the profit margin resulting from the rallying boxed beef. I like the willingness of that strategy, but it does not hold up like it used to with fewer negotiators left. With an increased use of formulas, we are becoming used to low correlation between box prices and cash cattle.
Fed cattle numbers in the north remain tighter than normal with the south backed up with cattle ready to move. The August futures contract is facing pressure as it is receiving large quantities of deliveries from the Tulia, TX area. That appears to be one way feedyards are trying to move cattle that can not get a bid. It also puts pressure on the market by chasing the long speculator from participating. Regardless of the reasons, you will here grumbling about the delivery process as the spotlight is shining on it now with the possibility of somebody using it as a tool for manipulation.
The NCBA national convention was held last week so we will see if there was any clarification on issues for the beef industry. Summer is running out so buy some beef from your local meat locker and fire up the grills. Eat some high-quality local beef and have a great week.
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.
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A strong fat lamb market offers producers hope after the Covid pandemic and the sale of a major lamb plant coupled with the bankruptcy of a marketing cooperative sent the market into turmoil in 2020.