Varilek’s Cattle Call:  Seasonal Rally |

Varilek’s Cattle Call:  Seasonal Rally

The cattle market saw the test of contract highs last week for many reasons. The tighter expected supply stayed on the front-page news, and seasonal trends found some buying in the market.  It was not a straight direction for the trade as it held volatility all week. The stock market also played a role in the swings for the cattle market. Another rise for interest rates and an unstable stock market kept the livestock market on edge.

Cash cattle trade was steady mixed with $248-249 dressed and $157-158 in the north. The south started the week with $152 bids and was able to move the needle up to $155. The daily slaughter levels took a hit with weather issues and a slower chain speed. Showlists were not yielding large numbers in my opinion so the packer may not have wanted to push the bid button too hard. They may not have found many more cattle if they pushed anyway. Some of the cattle bought the previous week have already been harvested. It still felt like the packers would take numbers if they could but were not interested in pushing for them.

It is not secret that the cow herd is significantly smaller. The large female slaughter over the last two years will be a factor moving in to next year. Boxed beef prices will have to be high in order to ration the tighter numbers ahead in my opinion. With the recent moisture across the United States, maybe this will signal our first sign of rebuilding the cow herd. It is too early to tell if drought conditions are over but is possible. That would potentially see heifers make the move from the feedyard to the cow herd. 

Maybe the beef industry will see some changes in the coming years. The first rumors are circulating that formula trades are not covering the cost of the high-priced corn in the south. Maybe the next time boxed beef trades at $450, some of it can make it down to the line to the cow calf industry. Have a good week.

Scott Varilek, Kooima Kooima Varilek Trading

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