Varilek’s Cattle Call: Cash Market Woes
The cash market trade is $184-$185 dressed with the bulk of the trade at $184. Cargill continues to be the buyer out in front purchasing northern cattle. Cash stays strong despite the Thanksgiving turkey run. The second week of December is a timeframe traders look for a seasonal low to form.
The cattle futures had a sharp break on Friday with some chart damage noted mainly for the deferred contracts. Carcass weights were up on the week as well adding to the negativity. The weather has been conducive to positive weight gains with producers surprised with heavier cattle when they run across the scale. Another factor was due to bearish cattle on feed report estimates prior to the Friday report.
The cattle on feed report was not quite as bearish as estimates but still showed larger placements. The placements for October were at 110 percent vs. the estimate of 112 percent. Cattle marketings were at 99 percent vs. the estimate of 100 percent, and the on feed number was in line with the estimate at 100 percent.
On Friday I received the awaited study from two Kansas State University and one Iowa State University professors on reporting negotiated cash. It is only seventy two pages long so give me a week to go over the numbers before I can comment. A meeting will be held in Kansas City next month discussing the assessment and recommendations on mandatory price reporting. I will be attending the meeting and am excited the industry is diving into the negotiated cash conversation. My hopes are that we can have a real discussion on the large decrease in negotiated cash and what it means for the future of the beef industry.
Scott Varilek, Kooima Kooima Varilek Trading
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