Varilek’s Cattle Call: Wavering demand
Varilek’s Cattle Call: Wavering demand 6-5-20
It looks like a sloppier tone as we start the month of June. The charity cash bids are starting to slip as we see trades from $100-$105 entering the market verses the $110-$120 in the week prior. The beginning of the 2019 calf crop is taking to the showlist in hopes of catching the extremely positive basis. Seasonally the cattle market sees a drop from the spring rally entering summer adding to the urgency.
Boxed beef continued its swift break from record highs and now traded around the $265 level for choice boxes on Friday. Reports of slowed demand with the large upcharge on beef circulated in the rumor mill. The packers were holding some back logged supply due to the consumer sticker shock. We also may have had a slow down on people going out to eat this past week in the cities. I think I might have stayed home too.
Last week the Department of Justice subpoenaed the biggest 4 meat packers in an antitrust probe. Many cattle organizations demanded this investigation take place as a cry for help. This news was reported shortly after the poultry industry experienced a similar acquisition of price fixing. In my opinion this will be a long slow process, and I do not expect an immediate answer. However, the DOJ seemed to be asking the right questions when analyzing the situation.
Producers began counting inventory last week as they enter the government assistance process. There will always be debate on the specifics of the payments, but seeing the cattle industry being noticed is welcomed in my mind. Moving ahead, we see the back logged showlist continue as we just now have packer capacity comparable to it’s potential. The road ahead is still a steep slope so keep your head up and continue to look for opportunities.
Scott Varilek, Kooima Kooima Varilek Trading
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Outtagrass Cattle Co. cartoon by Jan Swan Wood for the July 24, 2021, edition of Tri-State Livestock News