Varilek’s Cattle Call: Drifting Cash Cattle
Labor Day has come and passed leaving the major beef consumption holidays behind us. Boxed Beef has maintained a healthy price and will need some extra export assistance to hold these levels, in my opinion. The U.S. economy has been a helping hand promoting higher priced beef.
Cash cattle news for the north was down roughly $3/cwt last week with $105-$106 live trade and $172-$173 dressed trade. Carcass weights were up 3 pounds for steers and heifers for the week ending August 17 but still trail year ago levels. The temperatures have been conducive to better rate of gain on cattle for the last few months which adds fuel to the fire for future carcass weight gain.
Marketing cash cattle in the fall can be tough on a normal year but with less slaughter capacity it has the feeling of caution signs. The October futures maintain a steep discount to current prices on account of the uncertainty ahead. To heal up our own wounds, producers will have to decide how current we need to be. We are only in week two of cattle starting to be held back. Which means the industry has not begun to touch the larger phase of northern showlists. I would recommend staying as current as possible with cash bids positive to futures.
There will be more details coming down the line regarding changes to the live cattle delivery specifications. There are updates in the works that could increase the delivery weights allowed leaving me scratching my head a little. With the lack of profitability in the cattle industries, proposals for change are being touted by many organizations. A hasty decision could be costly for the future of the beef industry if made with only short sighted goals in mind. It is a good time to stay in involved and have a voice.
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.