Varilek’s Cattle Call: July cattle report gives insight

It is county fair season which of course equals the hottest days of summer. Kudos to all you fair families out there sticking it out in the show ring. Back to the news, the cattle market remains relatively flat with steady cash prices for the third consecutive week. Feedyards remain current with carcass weights slightly below year ago levels.

The July 1, 2019 USDA cattle inventory report was released recently giving us an opportunity to analyze a longer-term outlook on the beef market. The numbers were in line with prereport estimates showing the cow herd size remaining relatively flat in comparison with year ago tallies. Calf crop estimates were down slightly from last July; however, beef replacement heifers were down 4 percent. A continued increase in heifer slaughter dating back to last year confirms the plan on decreasing the cow herd size.

For an update on U.S. beef exports, we are at a slight decrease to year ago levels and are maintaining status as a net importer of beef. Our top customers remain in Japan, Korea, Mexico, Canada, and Hong Kong. Exporting to Hong Kong is a way to get beef into China and rumors are some beef sales to Korea are slipping their way into China as well. This is significant because all eyes remain what the world protein shortage is with the affects of African Swine Fever.

Cash feeders remain strong relative to finding a breakeven fed price. This is typical for the months of July and August with a smaller available supply of feeder calves in the north. Some producers dive in, but most typically wait for the fall run of sales to further purchase inventory. Uncertain feed costs are still a major factor keeping the producers in suspense.

In my opinion, the news in the beef industry is status quo at the moment. We do not have earth shattering news to cause much fluctuation currently. Less volatile markets can seem boring at times, but they do provide less pressure on marketing decisions. It is a good time to set some marketing goals and remember to “plan the trade and trade the plan.”

Scott Varilek, Kooima Kooima Varilek Trading

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