Varilek’s Cattle Call: Negotiated cattle will struggle
We had a slight struggle this week with cash cattle trade. Volume remained low with the slower chain speed in the height of sickness running through packer employees. The last two will weeks were hoped to be the climax of the issue, but we are all guessing when it comes to the effects of viruses. Trade wrapped up from $135-137 live and $218 dressed. Each buyer only had the ability to shop for about 500 head so the negotiated cattle will struggle and back up in the future with no change. Carcass weights over year ago levels did not signal hope for this issue to end quickly.
The highly anticipated January grain report was released Wednesday showing a slightly bigger crop than expected but not overwhelmingly bearish. The grain trade held together for the first day but looked for a correction in days following. If the funds want to hold a long position, the bull needs to be fed. This information did not give any fuel to the fire, and the easier path seemed lower. It is yet to be seen when inflation becomes the main story in grains again if it does.
Feeder calf prices in the sale barn did jump noticeably after the negative grain report was released. That jump shows the uncertainty to what feed costs will be for the coming year. Cost of gains are followed with a question mark in my opinion so trade carefully against your risk. The futures prices are at a premium level so hedgers will be more nervous if we see the board start to slip. It might be more enticing to entertain protection now with the upfront news a little sloppy in my opinion. Demand seems great, but will the producer be able to ask for higher prices with lower negotiated volume. I dearly hope we are not back looking for the charity bids again. Have a good week.
Grain futures survived a big test with a large correction last week. Funds appeared to liquidate a chunk of their position in commodities. Everyone wants to know whether it turns around or not, but remember,…
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