Varilek’s Cattle Call: Outside Market Volatility

Cash cattle held its own through Thursday with another $1.00 higher trade to $145 live. The north saw a lot of interest, but yielded few trades to print. The north is very current as the choice select spread shows the need for high quality cattle.

 Demand has been the concern with a consumer dealing with higher prices across their daily lives.  So far that consumption has held strong but a negative consumer index report on Thursday did not help matters. The outside markets continue to rule over the commodity trade with mounted uncertainty at every turn. Many expect interest rates to take another hike in the month of November.

Cash feeder prices have taken a bit of a correction as of late. Feed yards that really wanted cattle got some bought but with all of the higher costs, some are worn out from the higher costs. Many cattle buyers are calling with feeder offers suddenly so the last round of cattle bought too high by a trader may need to be cleaned up. That is typical during a cattle rally to buy feeders during a rallying market because you can eventually get a rally to sell the cattle. I do not think the rally is over, but it feels like some feedyards needed a break from higher feeders and feed costs. However, with interest rates planning to rise when notes are renewed, maybe a feedlot wants to dive into another group while some cheaper interest still exists. That might be a far-fetched thought, but it did come from a cattle feeders mouth.

Stay safe in the harvest and hunting season. The beef industry still has some tight supply that will keep prices at good levels. As female slaughter slows down, we should see some fireworks. Have a good 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.