Varilek’s Cattle Call: Weather Challenges
Grains continue to be the main story line for the futures market with a challenging growing season. Corn is maintaining a price level higher than the trading range held since 2014. The USDA August 12 crop production report will use the resurvey of acres as well as FSA acreage information and satellite data for a new twist. I feel it is welcomed to finally see the FSA acreage numbers used in the crop reports for a more accurate picture.
Corn basis is a main signal showing end users push to get their hands-on physical corn. Good to excellent ratings on the Monday crop conditions report are the second lowest in the past ten years. It is too early for an accurate yield guess on this crop, so I look for the end of August to start fireworks in that category. Regardless, we will probably have a volatile corn market for the rest of the year.
Cash cattle was mostly steady with $111 live trade in the south and $115 in the north. The packers were not buying as many cattle for the delayed delivery like this springs trade. In my opinion, the increase of forward contracted cattle has been holding back the more aggressive bidding. August shows a 50% increase in contract cattle from the prior year followed by a 33.5% increase for September contracts.
Demand was viewed negatively last week with high temperatures decreasing grilling interest across the major East coast cities. A slow start to the spring grilling season coupled with the hot summer temps has hurt beef movement slightly. Lack of news has the cattle futures doing a sideways chop in wait for something new. Hot temps have not kept me from grilling so keep the propane tanks full.
Scott Varilek, Kooima Kooima Varilek Trading
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