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Varilek’s Cattle Call: Steady Slide

The stock market has been on center stage with the many issues abroad. Last week it showed some signs of recovery with some higher trade from the Dow Jones and S&P most notably. Energy prices were still trading at higher-than-normal prices affecting consumer spending. There does not seem to be a nearby end to what we will pay at the gas pump.

Fed cattle prices and the futures markets saw some weaker trade with cash prices starting the week at $142 in the north and $136 in the south. By the end of the week, it was tougher to get a bid near the high levels of the south. Next week I anticipate bids will be for the first week in July, and producers will line up to take the first bids that come again. The positive basis makes it enticing to lock in that bid. Plus $8.00 corn puts the pressure to keep cattle moving. Carcass weights were down significantly, and comprehensive weights were below year ago levels for the first time in a long while.

Cash prices are hanging on, but futures are not finding a place to hold. That can be one reason for the week over week slips. Great demand is behind us, and nobody is positive for what lays ahead. There is a world food shortage issue making it hard for me to believe demand drops too far.



Grain basis improved despite a correction in the corn and soybean futures. Trying to buy feed needs on a break did not go as smooth as maybe anticipated. Corn held support level of $7.03 on December futures but is still in range of testing it. The United States crop does not have major issues to keep the bull train going in my opinion, but the inflation and world issues are still in full swing. 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.

 


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