Varilek’s Cattle Call: Turning Market?
The cattle market witnessed more poor cash prices last week, however, it did trend higher once it started. Bids surfaced at $100 live and were $102-$103 by the end of the week. That was not a huge rally of course but a good sign regardless. The front month futures remained choppy with the lack of clear direction for the future. However, the deferred contracts experienced a bit of a rally with fund buying. The recent hog market rally aided in steering the funds to buying protein. Rumors of African swine fever in Germany started that sharp rally in the hogs. South Korea was thought to then shut off Germany as one of their pork suppliers.
Another round of CFAP money is close to being announced for cattle producers. I only hear speculation at this point, but another $55 per head could be possible for inventory that was not sold. It would be a nice shot for the cow calf man, but maybe not so much for the feedyards that sold cattle. If you already met the cap dollar amount, you would not qualify for anymore payment I am told.
Boxed beef prices continue to erode slightly which is typical for post Labor Day trade. I do not feel alarmed with that action. However, cattle weights are keeping me alarmed. Steer carcasses for week ending 8/29/20 were up 6 pounds at 916 making it 32 pounds higher than year ago levels. We do not appear to be getting the large cattle under control this year which is evident with not having any leverage over the packer recently.
Grains are catching more attention with a sharp rally to end the week. Uptrends are noted in the corn and soybean markets. These rallies appear to be demand driven making it more powerful than supply worry bounces. China continues to make large purchases of corn and soybeans every week. Now just so they do not start canceling them like we have seen in the past. Have a great week.
Scott Varilek, Kooima Kooima Varilek Trading
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