Varilek’s Cattle Call: Feeder calf prices leading the charge

Cash cattle took the prize for the week with several northern trades at $200 cwt.  Some small regionals did pay $201 in a few places.  Delivery dates ranged from a couple weeks out to “we need them Monday.”  Producers held the leverage and were able to get the $4.00 higher cash trade. 

Everybody is asking how the market can go.  You know none of us know that answer, right?  Regardless, this rally is fun but makes it hard to know when to add protection. Margin calls are real, but being uncovered at such a high price could risk the farm if a black swan stops by.  With the high price, it means higher priced protection too.  Protecting that bottom line will cost more with doing business at record high prices.  Put some thought in to where your biggest risks are and what you can sustain.

Feeder calf prices are leading the charge with farmer feeder action starting the bidding for 2025.  It might be more bullish if it was the corporates, but that can change fast. Sale numbers are down from previous year auctions.  We know we must be tight if cash live cattle can hit $200. 

Demand for beef is still in good shape even after the holiday slow down. We will likely see some pull back, but packers might slow the chain speed to keep their margins surviving. Cash is getting away from the packers which is the bed they made with record profits in years past while the beef producers struggled. Have a good week, and be careful with these markets. 

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.