Varilek’s Cattle Call: Market on the slide
One of the unwritten quotes of market movement is, “take the stairs up and the elevator down.” The cattle futures continue to try find a bottom as the break continues.
The packers took advantage of the downward trending cattle futures and were able to lock up live cattle for every week over the next month. Producers were willing sellers last week taking advantage of an excellent basis opportunity with the cash trade ranging from $190-$192/cwt dressed.
We left the spring high territory with modest disappointment. With excellent global and domestic demand and one of the worst cattle feeding winters in the last 50 years, we only had cash trade at $130 live for the matter of a couple hours. The supply of cattle was too large for any further rally logging a slaughter week of 670,000 estimated for the second week of May. Carcass weights have climbed higher than year ago levels, but this is comparing to the hyper-current status we had in 2018. Calf feds were not a large part of this slaughter mix compared to May last year.
Boxed beef prices have slipped slightly from the highs. Mother’s Day weekend is one of the best beef demand periods of the year. Weather has the grilling season off to a slow start with every week lost to poor weather, one that we cannot get back. Sunshine is in the forecast so let us hope we can sustain some better weather to get us back on track.
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.