Varilek’s Cattle Call: Commodity Liquidation
We have seen a similar pattern over the last few weeks with commodities. The funds appeared to lighten up some of the length pushing grains back to prices seen pre-Ukraine invasion. The bulls’ stories poured into the long grain rally, but a few have lightened the mood. The United States dollar has picked up significant strength hampering export talk, and timely rains hit the corn belt after the 4th of July weekend.
The corn and soybean crop carries with it typical stories of yield worries but is not looking like a disaster. You can always find what you are looking for in weather markets with somewhere being to dry and another place carrying plenty of moisture. You need to do the best you can to make your own assessment from trustworthy sources. Street credit is important in the trading world because you can always find somebody talking their position. Basis is still telling a story of end-users looking for grain so keep an eye on that for a nugget of direction in my opinion.
Cash cattle prices were steady with $137 trade in the south and some $148 in the north. Packers were not banging on doors as hard as in previous weeks, but still do want your cattle. Daily slaughter levels stayed strong with boxed beef showing upside movement. Female slaughter was boosting the slaughter as seen the past few years. The heifer retention cycle does not look to be upon us yet. The deferred futures market is looking at the same data we are regarding female slaughter. Premium prices are keeping the incentive dangling in front of cattle feeders.
I hope you had a good holiday weekend. The dog days of summer are ahead of us yet making it hard to scream bullish news, but I do look for a less invasive summer break in my opinion. If the south had the ability to move the cash needle, it would be fun to see what beef producers could have achieved over the last few years of record packer margins. 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.
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