Varilek’s Cattle Call: Good demand but Slipping Cash
Fed cattle cash news started the week steady in the north from $125-126 with a slight increase in the south on the topside up to $121. Friday some northern cash slipped to $121, and a major pulled their bid. The futures were reacting higher until midday when the cash started to flip. Grid bids were trying to entice people to lock in some cattle for the second week of August. That week is usually a spike week lining up ahead of Labor Day which makes me think the packer is trying to keep a lid on it by locking up more captive supply.
The north is as current as they have been in several years. Rounds of losses, high feed costs and competing in an uphill cash battle is wearing on feeders. Feeder calf prices stay strong with many empty yards competing to refill which is typically now through August. Future breakevens require a sharp pencil. Feed cost uncertainty is where a large question lies.
Boxed beef prices are breaking but still carry a seasonally high mark. Hides and drop credit one year ago were $0 for hides and $6.50 for drop. Today they are $55 and $13.00. That is a nice boost for the packing industry. The beef movement is surprisingly strong through the summer and should see another run as we near Labor Day.
The futures market is still showing some great prices for the winter and next spring. Be careful as we tie up more dollars buying feeder cattle with higher feed costs. Have your plan and trade your plan. Managing risk this year will be important. Female liquidation might give us a great future if we can establish any leverage in the industry. Have a great 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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Fed cattle cash news started the week steady in the north from $125-126 with a slight increase in the south on the topside up to $121. Friday some northern cash slipped to $121, and a…