Varilek’s Cattle Call: Exhausted Market

Volatility is at its highest with all the stock market fears in the world. Coronavirus fears are still the most talked about story in the commodity trade. We can only try to use the best of our knowledge when making marketing decisions. We all want to keep some of our powder dry, so we are still standing when opportunity presents itself.

The live cattle chart is one to take note of this year. Most of you are not familiar with charts, but this will be one to print off and file. Currently we have entered the third leg lower on the live cattle charts. Over history, many traders look for three legs lower or higher when a market is making a significant correction. We are putting together a textbook formation when studying the free-falling futures. Just google the “Elliot Wave” if you want to investigate more. In my opinion, many traders will be looking for this formation to decide when to start making moves on the board.

Carcass weights broke for the week ending February 22 but remained well above year ago levels. Steer weights were twenty-six pounds heavier than last year. We saw a large clean up of cattle to end the month of March, and we hope the weights start to correct lower once those carcasses move through the system.

Currently we are following the wave of the stock market, and we all have our theories on how long the fears will last. I still think you can always sell meat in May and look forward to another year of excellent beef demand. The demand for a quality product in beef is still real in the USA.

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.