Varilek’s Cattle Call: Stock market playing a role

The cash market held firm again with the north getting $184-185 on Friday, and the south crawled up to $183.  Trade was coming in from many packers which helped with producers’ decisions.  Feed yards held the leverage with the northern negotiators current.  Carcass weights were printed higher again, but it still appeared packers were backing up formula cattle to fill the hole of less numbers.  Packers may be fine with this smaller cow herd if they can use all of their corporate deals to fill the gap.  It feels like the packer-controlled yards do not have much care to get the market higher for a fully sustainable industry.  That shot fired might hit somebody, but individual family operations are not as in charge as before.

The stock market has played a large role in the swing in cattle futures.  Much of the down was based on poor economic news, and the sharp rally in the stock market brought the cattle right along for the ride.  Cattle futures found themselves overbought to finish the week heading into the “cattle on feed” report.

The Friday USDA report was all in line with estimates with 101% on feed, 99% placed, and 96% marketed.  It may not be the report we need to get that finishing touch on this rally but will not hurt.  We see choice boxed beef slipping seasonally, but the large carcasses are helping that supply. 

Bullish or bearish you can easily find material to make a case.  At least this rally is giving an opportunity to make some marketing decisions that was not available earlier.  Have a safe harvest.  Get home to your family when the work is done.

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.