Varilek’s Cattle Call: Box Beef Slip
Editor’s note: This week’s column is coming to you from Joe Kooima, Scott Varilek’s business partner.
Cash trade started the week on firm ground with trade starting at $140 in the north sector, but finished with slight weakness of $139-140 in the south with some $138 being reported in the north. Cash market has had a tremendous run in the last 5 weeks stemming from the shift of leverage into the feedlots alongside cash negotiation and participation from all the packers. The futures discount to cash has also helped move cattle, although at marginally lower cash than previous week.
Boxed beef perhaps is the main story this week, roughly $8-10 lower on the week. Weakness is coming mostly from the high-end cuts, in front of the back-to-back holiday run, with pushback coming from the retailer and consumer. This can be more of a short-term issue with product still having to move through the system at softer prices. Rarely do we see much correlation between the boxes and futures, so I am not willing to hang my hat on falling beef prices. But at this price level I am willing to watch what unfolds, given that the box prices are at/near pre-pandemic prices.
Carcass weight continue to work higher than last year once again. It is somewhat of a yellow flag to see this, but given we are still profitable and willing to sell cattle at softer prices this week, I am alright with the weights the way they are.
Grains, both corn and soybeans flighted to the upper part of their recent range. The grain report Thursday showed nothing different in respects to ending stocks compared to last month’s report. However, corn basis is giving strength to the corn market and a dry pattern in South American is offering support to the soybean contracts.
Joe Kooima, 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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