Varilek’s Cattle Call: Oversold Market Conditions
The cash cattle market traded weaker on Tuesday and Wednesday of last week. The first bids early in the week of $102.50-$103 were taken. It was disappointing how fast producers jumped at the bids on a Tuesday. Dressed bids ranged from $162-$164 with yields increasing for feeders with cattle on feed for long days.
We know the demand seemed solid for the Labor Day run, but it is the “after” that is unknown. The weaker dollar is benefiting grain and hog exports, but cattle are not quite exploding in my opinion. The stock market continues strong giving hope for continued domestic demand optimism.
Fed cattle showlists seem manageable for a typical September market in my opinion. The numbers in the south are below Covid 19 struggle levels, and the north has less numbers than a year ago. However, the first low ball bids in the week being taken do not help me prove that point. It could be that weights remain well over year ago levels with steer carcasses 26 pounds higher than in 2019.
The cattle futures have had a significant correction and found themselves oversold on stochastics to finish the week. There is a rumored plan for more funds to be rolling out of the front month longs next week. It can put pressure on the market, but many funds are waiting on such an opportunity to utilize that for entry. I expect more sloppy trade only being in the beginning of September, but it will be much more fun to shop for feeders as the run is starting for the north. Have a great weekend and grill on!
Scott Varilek, Kooima Kooima Varilek Trading
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