Varilek’s Cattle Call: Grains Rally
A grain report Wednesday sent corn and soybeans sharply higher. Less than expected acres was the main reason for the swift move. Soybean acres remained steady with the March report at 87.6 million acres, and corn acres were raised 92.7 million acres. Both numbers were significantly below pre-report estimates.
The corn rally has an impact on live cattle prices. Producers will be quicker to take fed cattle bids if feed costs move too high. That puts pressure on the front month with a larger showlist to move. Southern feedyards are backed up, but northern yards are current. Cash prices are noticeably different with southern trade from $120-$122 and northern yards getting $125-$126. Packer participation was the best it has been for producers in a while with all the majors in the market. A large showlist in northwest Iowa has cattle scheduled for Dakota City for the first time since before the Holcombe fire in 2019. It has primarily been a formula plant in that time frame.
Deferred cattle contracts have an adverse effect with grain rallies as opposed to the weakness in the front month. There needs to be more incentive to feed cattle if feed costs are going to be higher. We are trading in the upper $130’s in the 2022 contracts after achieving contract highs on Thursday. There is a still a lot of optimism in the future of the beef markets with increased demand domestically and in the export market. China is purchasing a noticeable amount of beef in 2021. However, as we ship more beef out, Brazilian beef finds its way to the United States easier.
Have a safe Independence Day and be ready with the garden hose shooting fireworks. Grill some beef and fill the cooler. Have a great week.
Scott Varilek, Kooima Kooima Varilek Trading
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It was a mostly uneventful week with futures prices slipping from the contract highs that were recently placed. Cash was sluggish with a $1-2 lower feel. The confidence in $125 trade was not apparent. The…