Varilek’s Cattle Call: Producers need a bigger piece of the pie
We saw the first test of the uptrend in live and feeder cattle futures. The markets have been overbought for several weeks with a rally of $11/cwt in live cattle and a $20 boost in feeders. After a $2 correction lower, prices found a firmer feel towards the end of the week with cash still being king.
The cash trade did get steady to $1 higher on Thursday with some $187 bids raised to $188. Meat bids were still lacking at $296. Many packers were out buying which is always a good sign for producers. Southern cash steady with the north is always a challenge to me with a large quality difference between the two. A $26 choice select spread should make higher quality northern cattle exponentially better than the south. We raise good cattle in the north so we do not get rewarded for it. The extra money incentive goes south to try make them better. It sounds like a “build back better” process to me if you get my drift.
Carcass weights took 1 week off from being lower only to shoot right back up. Steers carcasses for the week ending 10/5/24 were 28 pounds over year ago levels. It has been one way to add production on tighter numbers in the cow herd.
I have not seen the interest in large growth to the cowherd. Input costs are high and maybe cattle feeders do not trust the sustainability of these high prices. Producers are needing a bigger piece of the pie to keep operations profitable. Currently the retail sector is taking a large part of the pie. Possibly the retailer will need to pass more down to ensure our producers can try to grow. It is all just speculation, but remember to fight for the business we love. Have a good week.
Scott Varilek, Kooima Kooima Varilek Trading
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