Varilek’s Cattle Call: Market Recovery Welcomed |

Varilek’s Cattle Call: Market Recovery Welcomed

Between trade deals, carcass weights, and cash cattle, the futures market is torn on which direction it wants to move. The recovery from contract lows is a small breath of fresh air as the fall drag continues. There is a gap in the cattle charts above current levels that appeals to the bulls. On the flip side, the bears are looking at an overbought market after an $8 rally.

The U.S. is said to be close on inking a new trade deal lowering tariffs on beef shipped to Japan. Australia is currently our biggest competitor in Japanese beef business. This will level the playing field significantly to improve our position for future beef sales on the world market. In other world market news, the China negotiations continue with the ups and downs of whether headway is being made or not.

Carcass weights for the week ending Sept. 7 showed steers up nine pounds and heifers up four pounds. Weather has been favorable for better than expected gains in the feedyards. This is our first large jump week over week in weights, but we have not eclipsed last year levels yet. I have been a broken record on the reasons why we need to stay current so I will not beat a dead horse.

Cash cattle trade had a slightly higher trade with 160-165 dressed sales across the Midwest. With the feedyards declining to take lower prices in previous weeks, the bids had to creep up to shake some loose. Colored cattle and heavier cattle were having a tougher time finding a cash bid. Packers seemed to be cherry picking quality cattle.

The cattle on feed report was neutral for “on feed” and “marketing” numbers, but placements of 91 percent was a little friendly. The market was anticipating the lighter placements so let us hope it was a surprise to some traders. There are many empty yards ready for cattle, so happy shopping my friends.

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.