Varilek’s Cattle Call: A Frustrated Industry
After another week of unimaginable volatility, many were left speechless. The question was asked on CNBC, “If demand is up, why are prices down?” I am noticing the bulk of the frustration from producers being based around this question, and, it wasn’t even answered on television.
As producers, we all feel a little let down on how the futures and cash market are reacting in relation to demand with grocery store shelves empty. At KKV Trading, we are using all the influence and power we can to try make things more suitable for the cattle producer. It is for the future of the next generation that we stay as involved as possible in these unexplainable times.
To sum up the week, we had cash market in a range from $112-$120 live with choice box trade higher than $250. The higher cash prices were traded toward the beginning of the week with optimism of the packer in good faith sharing some margins with the producer. By the end of the week the shift fell back to anxiety and cattle feeders took lower prices. Uncertainty and fear continued to win with most of the commodity markets.
None of us know where the low is or how to proceed. I continue to recommend trading against your risk and find a way to still be standing on the other side after this debacle. We are all in this together and are trying to find solutions. My first battle is to try bringing back negotiated cash trade to the cattle industry in hopes of maintaining our independence. That topic appears to be a north vs south issue but is gaining steam as many organizations are rallying around the idea of trying to recapture some sort of leverage against a small number of packers. Negotiated cash trade is only one of the many issues being contemplated but is maybe a starting point. I wish you all good luck and health as we proceed down this uncertain path.
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.