Varilek’s Cattle Call: Demand remains strong
The grain markets stole the headlines for the week with volatile moves and a strong finish. The USDA report Thursday showed a higher yield and ending stock number compared to pre-report estimates, but the futures markets fought off the negative news on hopes of a partial China deal.
Cash cattle trade was mostly quiet with some trades on Friday at $172 dressed as of the close. Negotiated cash trade volume has taken a hit since the Holcomb, KS plant fire. Iowa and Nebraska together declined negotiated trade 37 percent over an 8-week span. Statistics showed a decline in Iowa slaughter numbers by 23 percent and Nebraska by 16 percent over that same span with Kansas increasing 4 percent. The independent feeders were the ones to take a hit when the formula cattle in Kansas needed to move North to be slaughtered.
The decreased slaughter in the north could be a sign of cattle backing up. Carcass weights for the week ending September 28 increased 2 pounds on steers and 5 pounds on heifers. The carcass weights were still below year ago levels but will be watched closely to get a better handle of our movement in the feedyards.
Demand remains strong with a healthy boxed beef price and a choice select spread of more than $25. The USA is a net importer of beef currently but has higher export hopes for 2020 with future trade deals. The weather is changing quickly so be careful on the roads everyone.
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.