Varilek’s Cattle Call: Spring Rally |

Varilek’s Cattle Call: Spring Rally

It was a rough week for cattle futures, but the cash market did hold together. The north continued to trade in the mid-upper 140’s with the south near steady at $140. The large break in futures caused many producers to take bids for the last week of May for $230-232 dressed. With a wide basis, it aided in the decision to move new crop calves with $8.00 corn in the ration. Carcass weights did break and should in the foreseeable future.

The futures market took on a shot to the chin with a severe correction that lines up seasonally with live cattle trade. Fundamentals did not play a large role in the break with decent cash and rumors of great boxed beef movement. The live cattle will find themselves oversold and cash could be a factor if the market turns around. Many look to take that positive basis in May giving the packer leverage for the next month. If the USDA reports of more numbers are correct, we may not see much of a bounce, but many disagree with the larger on feed numbers.

Washington D.C. is deep in hearings with packers, feeders, and politicians duking it out on the future of government legislation in the beef industry. The games being played are hard to watch, and we hope for a strong future for the next generation. Beef producers should not be forced to liquidate to finally create a rally in the beef industry. We have experienced record beef prices and still see liquidation in the cow herd. Hopefully a solution can be made to preserve the right to raise beef in the United States for the small family feeder. 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.


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