Varilek’s Cattle Call: Steady Live Cattle Cash

The futures markets still have eyes on the Ukraine situation but are becoming used to the ongoing turmoil. High energy prices are a worry to the overall demand for beef. Events of the last two years did not break the desire to eat high quality beef. However, the threat of a worsening war or a recession are two of the biggest threats to changing beef consumption. Those are instances that a producer has no control over, but we do have the ability to lessen our exposure if needed.

Live cattle cash prices were steady again with $138-139 trade across the country. The $140 trade is happening in the east with tight supplies noted. Negotiated cash still seems to lack the ability to bring cattle prices on a spring rally ride. Packers are not up and down the road with bids, and cash trades hit the sell button as soon as a price is offered. Everyone continues to say we are 2 weeks away from tighter numbers, but myself having a slight attitude problem, has that not been the slogan over the last 2 years. Producers do not seem to have a market where they can gain leverage back from the packer.

With the steady cash trade, futures have remained in a sideways chop with no real direction. Funds have unwound some length with the outside market volatility and the lack of news to feed the bull. Deferred contracts have been trading steadier with December futures holding near $150. Filling empty pens will provide breakevens in line with those higher prices, but the uncertainty of feed costs is adding to the risk. Increased cow and heifer slaughter will continue to create optimism in the future of cattle prices. Have a good week.

Scott Varilek, 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.