Varilek’s Cattle Call: Cattle Industry Action
Lately many in the cattle industry are abuzz with the financial woes upon us. Cattle organizations are pulling together for solutions. We might see the many holes in a tire, but we can only try patch them one at a time.
One recommended solution is increasing the amount of negotiated cash cattle trade. To win some leverage back for the producer, a new 30-14 policy is circulating among national and state cattle organizations for approval. The proposal mandates each packing plant that reports to MPR to trade a minimum of 30 percent of their weekly purchases by negotiating cash and harvest within 14 days. A 30 percent level is the original level discussed but is now heavily debated to increase to 50 percent. This change is to try keep a competitive advantage for producers to stay more aligned with boxed beef prices.
Last week was evidence towards the broken cash market. With slower moving chains, the cash negotiators that set the market were unable to get a bid for the second week straight while formula cattle fill the slots. Cattle feeders have been unable to stay current in the north with the lack of cash bids. Carcass weights were lower on the week but remained twenty-four pounds over a year ago. However, last week was the first major decrease in slaughter as opposed to the larger than expected in the past weeks.
The cattle industry is one of independence and pride in my opinion, and I hope we can maintain those characteristics for the next generation. We currently spend more time on the phone promoting cattle producer rights than trading the futures lately, but we have the attention of the people to make change with a spotlight on a distressed industry. I wish you all a Happy Easter!
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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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