Varilek’s Cattle Call: Boost in the Market
Last week was our first major sign of recovery. Three straight days the June live cattle contract traded at limit up. Many of the continued struggles still existed, but a positive trend was welcomed.
The cash cattle market was a roller coaster ride for the week. Bids in the north were spotty and carried a wide range of prices. Dressed prices started the week at $147-$150 and ended with some at $160 while others traded $180. The bids were not widespread as the packers’ struggle with chain speed remained. The south faired better with $110-$115 live trade.
Negotiated cash trade continued to suffer comparative to formula trade. Over the last 4 weeks, formula trades were down 29% and negotiated trades down 56%. We have been shedding a lot of light on that subject as it has made many headlines. Senator Chuck Grassley of Iowa has started the introduction of mandating more negotiated cash trade in Washington D.C. I will update the process as that moves forward.
Boxed Beef charges higher with a choice boxed beef price higher than $260. The struggle to keep up with demand in the grocery stores continues while restaurant restocking is around the corner. It will take time to fill the pipeline, but at least we may have found our low slaughter week as daily numbers slowly increase. Days of 82,000 cattle slaughtered are more than week ago levels but still off the 115,000 desired range. Cattle are backing up with steer carcass weights more than 30 pounds over year ago levels.
The CME is also proposing some changes to better the live cattle contract as well. Their ear is also ringing with the frustrated cattle industry. We all want “back to normal,” but do not wish to make changes that warrant unintended consequences. A little boost in the cattle market is a start to raising spirits.
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.
Outtagrass Cattle Co cartoon by Jan Swan Wood for the Aug. 13, 2022, edition of Tri-State Livestock News
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