Varilek’s Cattle Call: Carcass weight knowledge matters

Live and feeder cattle futures made all-time highs again last week led by fund purchasing in the markets.  Lower cash bids by packers did not scare futures lower. “If it walks like a duck, talks like a duck, and acts like a duck, it is probably a duck.” That is the feeling of the cattle market as everything still acts like a bullish trend.

Cash prices rose a dollar in the south to $180 with limited trade in the north around $183-$184.  The dressed bids made up most of the northern cash with $287-292.  Some were attached with grid premiums which have been yielding a nice boost with excellent boxed beef prices.

I see most feedyards electing to pass these prices with a premium price structure in front of us. Also, producers are current and do not have to sell. The heat in August took a toll on cattle weights. With lower feed costs and premium weather, it is a great time of year to get some cheaper weight on cattle.  You can almost hear the cattle growing when you walk out in the morning to beautiful cool temps. 

Carcass weights ending the week of August 26 did not show the decrease that I expected. The heat took pounds off in my opinion, but we will have to wait another week for any proof.  Packers know what carcass weights are immediately while producers have to wait two weeks to find out.  Hog weights are next day information. Cattle organizations should make a push to level that playing field.  It seems obvious to me but keeps flying under the radar. Have a good week. 

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.