Varilek’s Cattle Call: Risk on Nov. 13, 2020
Scott Varilek, Kooima Kooima Varilek Trading
via Tri-State Livestock News - Nov 13, 2020
The cattle futures finished the week with a negative tone correcting the overbought status. Cash trade was viewed as bearish finishing from $108-110 live. It has been a strong rally getting to this point, and many reasons were to blame for the decline.
Mostly, the market is worried about news of a possible shut down. We remember how disastrous the last economy shutdown was to the cattle industry. The reminder of that event is sending shivers to the unhedged cattle feeders warranting downward pressure on the markets in my opinion. Feedyards are not ready to soak another large financial hit so a turn in the cattle futures price creates volatility. However, at least we have a better understanding of what to expect. Boxed beef prices are on the rally with the stocking up in mind. Retailers and packers will likely try being ahead of the game as shutdowns loom.
During the spring shutdown, demand held surprisingly well with the general consumer stuck at home for an extended period. There was a shift from restaurant to home cooking which maybe helped consumers realize you could have a high-quality beef meal from your own home at a cheaper price. The major issue was plant availability to harvest cattle. The backed-up line of fed cattle put most of the pressure on the cattle markets.
We know that tough times are still upon us and remember to plan accordingly with...