Varilek’s Cattle Call: Seasonal wins over
Cash cattle trade was a struggle with a wide range of prices. The south traded from $107-$108 live throughout the week. The north remained super uncurrent and had trouble getting bids with trade from $100- $105. Delivery dates were being scheduled out as far as January. If the cattle carried extra size, you were lucky to receive a bid. Currently the northern independent feedyards are having a hard time tackling cash trade with lack of leverage. The yards are trying to get current, but do not have the ability to do so.
Futures on the other hand finish the week with a solid rally. Seasonal dates of December 8-16 are written on some traders’ calendars as the trend shift for the cattle markets. With 2020 being a year like no other, it is hard to know if a seasonal will hold water to all the uncertainty we face. It is great to see optimism in the market but with cash not showing a sign of live can be frustrating. The December contract will need to stay closer to cash since it is currently under delivery.
Cattle are finishing ahead of schedule with new groups entering the showlist immediately once we feel a cleanup. Rate of gains are outstanding with computer projections being outperformed to the surprise of the feeder. Cattle that are hedged for February are already making their way to the current showlist. This would have implications on future spring moves if cattle expected to be marketed for spring are already gone when spring arrives. However, the calf crop will also be moving forward. In my opinion, during the peak choice box demand this spring, we will not have as many long-day fed cattle around to supply that market. It is just the ability to trickle that down to the producer that we still face.
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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