Varilek’s Cattle Call: Seasonal Rally
The 2023 cattle market is underway at some nice price levels. Optimism continues with tighter live and feeder cattle supplies. With moisture in the current forecast, this might be the year for heifer retention. Higher prices alongside green grass might allow the cow calf producer to expand. It has been long overdue from the producers’ perspective to see some positive gain in prices. Packers have seen record profits over the last two years, and it should be time to see the leverage shift back to the producer.
Carcass weights started to show the effects of the winter conditions. Carcass weights for the week ending 12-24-23 showed steers down 7 pounds and heifers down 2 pounds. Both steers and heifers are following below year ago levels for that week. The past few weeks of weather should continue the theme of lower weights. The only thing holding that back would be the slow chain speed by the packer. Packers would like the bigger weights so some cattle get stuck in the pen for a while after a price is agreed upon.
Cash cattle trade was steady to weaker for the first week in January. The south started at $157 but slipped to $156. Northern trade was spotty with some $158 and $252 dressed. Showlists grew in size with holiday weeks and a slower slaughter pace. Historically, January can be a slow start for cash, but the futures market is holding premium prices so far. Open interest is growing, telling me that the funds are finding some value in the cattle markets. One major test will be the action on the February contract when the funds start to roll out. Will it be able to hold? Have a good week.