Varilek’s Cattle Call: Labor Day Rally
Cash cattle trade had a small boost with participation from all packers. It was a welcomed change to have options when taking bids. A few yards elected to pass on the bids feeling more optimistic, but many traded at $101 in the south and $103 in the north. Dressed bids fell mostly at $163 versus $160 a week ago. Having some feedyards passing bids is also a new development.
Weights continue to be an issue with steer carcasses as of 7/25/20 at 31 pounds over year ago levels and showed an increase of 4 pounds from the prior week. The weights have not proved we are completely caught up from the back log due to spring plant shutdowns. Some believed August and September would have tighter numbers prior to what is covid 19 which left us confused just what the fall run of fats looks like. Daily kills dropping last week added to the confusion of what the future holds. Is there a wall of cattle or not?
The charts show the cattle contracts riding the overbought side after a substantial rally from the lows. Funds are helping the cause, but Thursday and Friday’s weaker trade may start to raise caution flags. Opportunities to make hedging decisions are coming upon us so have your plan ready.
Demand for ground beef is holding strong boosting slaughter cow and bull prices. However, that sector promotes importing low quality beef for grinding which is happening at an increased rate. The United States remains a net importer of beef. The choice boxed beef price is remaining just over $200 with Labor Day stocking in full force. Advertisements for beef are finally back in the grocery store papers enticing more people to return to beef. Grilling season is winding down so hit it hard folks.
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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Earl cartoon by Big Dry Syndicate for the Sept. 18, 2021, edition of Tri-State Livestock News