Varilek’s Cattle Call: International happenings affect market
After a sluggish start to the holiday week, the cash market trade wrapped up Friday at $198-199 dressed in the midwest with the south trading some $124 live. Generally, the trade was a couple dollars higher than the previous week. Many producers felt $200 dressed was a sure bet, but the south taking a disappointing $124 spurred the start of the sales.
Most of the agricultural futures markets were lower Friday following the news of the United States’ role in a strike on an Iranian commander. As this news broke, traders were suddenly forced to become experts in international relations and debated whether the recent news affects China’s plans to sign phase one of a trade deal with the U.S.
There is never a dull moment when deciding whether to protect yourself with hedges or not. It always takes me back to the quote, “plan the trade and trade the plan.” We should soon find out if the recent break in the futures market will be a trend shift, but regardless, opportunity knocks as the sale barns fill up with calves again.
The recent break in boxed beef prices has us watching for any signs of weakening demand. With that said, sub $200 choice boxes do not seem to be something I hear from the meat sector as of now. Other numbers I will be studying will be the 2019 slaughter data. Most notable of those numbers for me will be the steer/heifer slaughter ratio. It may be helpful to analyze for future planning to find out how far into the cattle cycle shift we really are. Cheers to what will hopefully be a prosperous 2020.
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.