Varilek’s Cattle Call: Cash Climb
Cash cattle prices finally moved the needle last week after staying steady for nearly 7 weeks at $180 dressed and $114 live. The north saw an increase in packer participation and interest with bids of $185 dressed and $115-$117 live. The best part was the active bidding from several packers. Producers in the north have not had this kind of interest in long while as packers were rumored to be short cattle.
Part of the reason cash prices are rallying is carcass weights. Producers are finally within year ago levels on fed cattle, and corn at $5.00 is helping the cause to keep cattle moving. Feed cost are figured into new purchases of feeders, but many not be for livestock finishing this spring.
Open interest in the live cattle remains at a maintainable level with the funds long. OTC or over the counter trades appears to be a growing part of the industry. That may be a new term for many of you, but it is otherwise known as a swaps dealer. It is another way for large operations to enter trades through a swap dealer to offset risk. If you have heard of accumulators from your local grain elevators, that is an example of such a trade. Swaps have become a larger part of the market and offers many new trading strategies for producers.
Demand looks to stay great for beef! Grilling season is here, and consumers are ready to go out and splurge after a year like no other. Fresh stimulus money for the public might help some pocketbooks. More CFAP payments for agriculture producers is also on the way after an announcement last week. Fill the propane tanks and let us grill.
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.
Outside markets had too much spillover into the commodities this week to make it much fun. We have rising interest rates and a shaky world economy to put more risk in the cattle industry. The…
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