Varilek’s Cattle Call: Grain Price Surge
Cash trade would classify as disappointing with dressed trade starting the week at $176 and ending at $174. There was not a large amount traded in the North as feedyards have slowly worked at cleaning up long-day fed cattle. Carcass weights came down and were within 8 pounds of year ago levels. That was a small victory to finally see us get within range of the year ago weights. However, soon, the industry still might see some sloppy uncurrent yards over the next 60 days.
Grain prices are the main story for agriculture markets with world fundamentals changing. China is hungry for feed. They have grown their sow herd at a rapid pace and remain in the import business even with higher prices. South America is battling drier conditions and the U.S. dollar is trading at a weaker level. The funds are out in front surging grain prices into contract highs with future volatility expected. A USDA grain report on Tuesday will make for a wild ride.
Feeder calves trade weaker with the large increase in corn prices. Feedlots will have higher feed costs than expected on current cattle and will start factoring in the cost of gain increase as they make future purchases. With less numbers on feed expected in 2021, feedyards should still look to find a way to maintain ownership. When the cow herd is finally decreased too much, just being in the game could be a healer in my opinion. However, nobody knows when that leverage shift could happen. Trade grains carefully and sensibly when locking in feed needs. We expect a wild 2021 as we entertain inflation and funds looking to take an early long position.
Scott Varilek, Kooima Kooima Varilek Trading
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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…