Varilek’s Cattle Call: Carcass weights, tighter supplies

That was a wild week for cattle futures with a sharp sell-off. The long steady grind higher was met with some large daily swings. Fundamentals arm wrestled back and forth, but cash was still king in my book.  Live cattle traded steady at $190 in the north and south most of the week. An interesting nugget was that many northern cattle were scheduled for shipment to Texas to fill plants. It remains a testament to the overall tighter supply which is the reason producers have leverage.

The bearish factor is the carcass weights. We have cheap cost of gains with lower priced feed costs and great feeding weather. Some producers are electing to put more weight on the cattle in the yard to capitalize while a packer does not appear to be worried about carcass size. Carcass weights ending 10/19/24 showed steer carcasses up 10 pounds week over week. That put steers 33 pounds over year ago levels. It is the one factor in my opinion that is keep this market from seeing that magical $200 price come. I understand it helps the bottom line, but with many in that camp, it could be what holds us down.

Producers are not used to having leverage over the packer. It is interesting to me that the Department of Justice is now digging into cash cattle trade issues now. We decreased the cow herd over the years due to lack of profitability and finally hit the sweet spot. The Holcomb fire and covid seem like two better time frames for an investigation. If anyone has details of how you have been treated with your fed cattle, get involved. Have a good week.

Kooima Kooima Varilek Trading

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