Varilek’s Cattle Call:  New records

The cash market led the futures for another week with new records.  Live cattle in the north traded mostly $204-205, and the south was able to get up to $202.  Dressed trade was around $220-222.  Carcass bids are becoming more prevalent with the yearling crop on the show lists.  Yields can be strong with the calf crop from 63.5%-65%, but yearlings generally drop substantially.  Packers know this; however, live bids are still here as of now. 

Cash feeders are leading the whole market higher in my opinion.  Tight numbers with a smaller cow herd and a closed Mexican border are two reasons sales are staying hot. It is a many years in the making to get to this point, so capitalize in the prosperity. We know tougher years are possible.

The grain markets woke up with the January report sending corn up 15 cents on Friday. Projected ending stocks and the past yield were cut more than the market anticipated.  Cost of gains for cattle have been projected low. This might actually make producers a little more nervous when covering feed needs.  It has been a luxury to not have to worry. The grain trend is up currently but is still at affordable levels.

Looking ahead we need to be aware of the border issue and other outside influences. The stock market is trading on edge with a new government administration ready to take the helm. The unseen swans are usually what gets the cattle market, so please be careful out there.

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.