Varilek’s Cattle Call: Sideways Cash

There was a calming down of the market last week after the previous week’s optimism. The futures prices took a correction from the contract highs finishing with a near $3.00 correction. Futures and cash quotes are in line with each other currently with deferred markets still holding on to a nice premium.  The April of 2024 contract is online and is catching some attention trading in the upper $160’s just $4 off of all time live cattle highs.

Live cattle cash trade was steady with $150 trade in the south and some $152-153.50 in the north.  It was hard to call that a disappointment, but it felt that way. Just a week ago asking prices from feedlots moved up substantially but the packer did not give into the try for leverage. The packer was able to sit on his hands and let the cattle come to them. Producers might be a little nervous holding out when prices are as high as they are.

We saw another interest rate hike last week creating more economy uncertainty. The outside markets did not trade as wild as previous reports, but livestock commodities still look to be a handcuffed to the future of the consumer. The last two years have yielded excellent beef demand.  The risk is the higher prices of everyday life tighten up consumer spending. 

One recent constant is the sideways trade in the corn market. It probably isn’t classified as cheap to a cattle feeder, but the decrease in volatility at least keeps us with a more level head when it comes to feed purchases. South American weather is a new story that will impact grain prices. It looks to be on the drier side, but an abundance of acres could yield a big crop.  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.