Varilek’s Cattle Call: Spring Rally |

Varilek’s Cattle Call: Spring Rally

We had a second consecutive week of higher live cattle cash trade with the south trade starting the with $141 and the north finishing $145-147. Many of the packers were out with orders and many regionals noted. The showlists were not overwhelmed with numbers. New crop calves were starting to enter the trade with good feeding weather and higher corn prices. The incentive to put an extra 100 or even 200 pounds is dampened with cash corn around $8.00.

The spring rally appears to be engaged at the seasonal April mark with demand projected to stay strong. Warmer weather will get the grills rolling. The exciting thing for the market in my opinion is the smaller cow herd. We are seeing some moisture hit some of the prairie country. If this persists, it will be time to keep heifers back from the feedyard for replacements. That can set up a tight on feed supply. High priced grain is also aiding in the current liquidation of cattle.

We need to be aware of the daily risk of your operation with higher dollars changing hands from feed to livestock. I might point out some bullish fundamentals, but we need to remember not to be overextended on a wrong side of the market. Plan your trade and trade your plan. If you are a put guy, keep being a put guy. The year of 2015 was a large sting to many operations that were not prepared. When buying feeder cattle that had a higher breakeven than the board, it can be hard to place some sort of protection underneath at a loss just to stop the bleeding. It might not be time yet, but what goes up does seem to come down in the futures market. Have a good week and STAY SAFE while the farming season starts.

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.


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