Varilek’s Cattle Call: Growing Hope
We can start off with live cattle cash trade like usual. Cash trade led the optimism with a $2 higher trade in the north and south. Texas and Kansas saw a boost to $152, and the north was able to see $155 trade to finish of the week. All the packers were participating which was a good sign. There was a lot of showlist clean up last week as packers dove into the inventory available. For the past two weeks packers tried to lower the cash but now had to show there hand needing cattle.
The futures market liked the action with a 4-day rally to finish off the week. Open interest did not show a big indication of fund buying in my opinion, but the feeder cattle futures finally tried to rally the front months above $180. Feeder cattle are usually the leaders in a strong market. Lately, they have not lived up to the leadership roll with funds short and a weakening trade.
The cattle on feed report was neutral to friendly on Friday. On feed cattle came in at 98 percent, and the marketing tally was 101 percent. The placement number was friendly at 94 percent. That was 2 percent lower than pre-report estimates. That report should not hurt the cattle market at all. Cow inventory has been talked about for years as female slaughter ramped up.
Things feel good and look good. We are already at high prices so we need to be aware of that. In my opinion, it is a good year to be a cattle feeder as long as feed costs stay in line. However, interest rates are starting to sting as notes are being renewed, and trucking expenses also do not make it easy. Have a good week.
Scott Varilek, Kooima Kooima Varilek Trading
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