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Varilek’s Cattle Call: Cash and Futures Optimism

The cattle market finished the week on a stronger note with contract highs for the December live cattle out through next spring. The optimism remains that the producer can somehow start getting a piece of the pie. Feeder calf prices are trading stronger in the salebarns with the rally.

The cattle industry is still in heavy debate trying to fix problems with packer margins near $1,500 per head and producers still seeing closeout losses in the private sector. Demand for beef is outstanding, and retail stores have lofty prices. We are now heinge the first signs of backlash by the consumer with the cost of beef in the market. The example I use is the person that got in trouble jacking up the price of toilet paper when it was in tight supply. This feels comparative when the uneducated consumer is frustrated with ranchers because beef is too high. The national media is interested in the consumer paying higher prices, but not a family beef operation on the verge of ending generations of building a premium cow herd.

Cash cattle traded as high $122 last week with our first sign of moving away from the charity $120 bids that have been circulating. There was much debate on why that is. Is the packer feeling the pressure from organizations and politicians or are they in need of more cattle? Bids were spotty again, but several different packers were active. It is notable that I heard of sales to six different packers this week in my trade area in the north.



Hopefully, we are seeing signs of headway for the industry. More players in the market are better for cow calf producers with many northern feedyards bidding on cattle. Empty pens are notable so keep up the good fight and thanks for reading.

Scott Varilek, Kooima Kooima Varilek Trading



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