Varilek’s Cattle Call: Futures Rally |

Varilek’s Cattle Call: Futures Rally

The cattle on feed report fell in line with the estimates Friday other than the placement number printing 102% versus the 104% estimate. On feed and at 100% and marketings at 101% were right in line. It should not have much bearing on market action in my opinion.

The cattle inventory was also released Friday as well. The one number I like to track is beef heifer replacement which came in at 4.40 million head making it unchanged from a year ago. We are seeing a slight decrease in the cow herd size, but I did expect more to be honest. Regardless, I would think both reports will not change many opinions towards the futures markets.

Cash was uneventful again with few trades from $157-$161 from north to south. It continued to be slightly higher than the previous week, but it was nothing to do a cartwheel over. The saying of taking the stairs up and the elevator down has proved to be true. Showlists have become more manageable but were far from having any leverage over the packer. A few trades took place for two months out for an even basis off the October board. That was maybe a good sign with a major worried about inventory that far out.

The 50-14 negotiated cash bill is still in the headlines as cattle groups pick sides. In my opinion, without it, we are on a fast pace to a more vertically integrated market with less players. I am stamping my approval on the bill and hope you strongly consider your stance to help producers gain some leverage. If the bill is to succeed, we need full support. I want the small and less than ten thousand head family feedyards to stay in business providing better health in the rural United States. The evolution of the cattle business is continuing to see a strong shift, and I want to act now. Please feel free to call and discuss with questions regarding the bill. Thanks.

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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