Varilek’s Cattle Call: Trend is Your Friend
The cattle futures maintain their rally reaching near a $25 gain for December live cattle since the spring. Our bottom lines as producers has changed substantially. Currently, we still have a much-needed healing in the cattle industry but can finally look at making decisions as the market rallies. Feeder cattle purchased throughout the summer do have green ink to look at. Hedging did start to pick up last week as we reach the $100 plus profit in some fed cattle. Others have the attitude of staying open after a prior $300 per head loss.
Funds continue to aid in the rally. While hedges are placed, I do have that thought in the back of my head about funds pushing on the hedgers slightly. Maybe that is just a bullish problem I have as a cattle feeder. Also, an old saying is “every other year”. Last years summer through spring was a year to be hedged. Possibly now this is the year to try maintaining some upside in my opinion. There is some advice you might be able to use as toilet paper, but it is good to walk through some of those scenarios in your head while making decisions.
Choice boxed beef did trade higher than $210 at the end of week. The Labor Day Weekend probably had a little help in that beef demand boost. The future of our economy is still mostly cloudy as schools attempt to reopen and the country seems to be divided on how to go about our normal lives. The election ahead will be the biggest upcoming event the markets will be watching. Do not ask me on that outcome. Good luck cattlemen and enjoy the rally while it lasts.
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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