Varilek’s Cattle Call: Head on a swivel

It was a very strong week for cattle futures with a more than $25 rally in feeders. Live cattle finished the week at about $18. It was still jaw dropping to see the strength in cash and futures together. Every break was met with strong buying power.

It is back to trading with your head on a swivel. We are seeing $235 trade to finish the week at $5 higher in the north. The south is very quiet with cash prices on a tight supply. Many northern cattle are being shipped south to fill the need. The Mexican border is still closed and is creating issues for packers keeping cattle around them.

Cash feeders took the cake as the lead story in my opinion. It was jaw dropping prices with breakevens as much as $20 higher than board prices. Filling empty pens was a challenge for producers that have been selling cattle. It will make yards feed the cattle they have longer rather than replace with feeders. We will see some record weights through the rest of the year in my opinion.

The market is already higher than anybody anticipated. None of us know how high it can go. A comment made in my office was this, “some think it can go higher, some think it can go lower, and I think they are right.” Confusion is the theme. Boxed beef is off the highs, but cash cattle are staying very strong. Just be very careful trading. It is no time to be a hero in these markets. Have a good week.

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.