Varilek’s Cattle Call: Steady cash and High Boxes

 

Scott Varilek, Kooima Kooima Varilek Trading

Carrie Stadheim - Tri-State News - Jun 4, 2021

 

The cash cattle market remains steady with the charity bids of $1.91 dressed and $120 live trading lightly. The fed cattle producers are lulled to sleep with the steady bids with no apparent ability to ask for higher prices. Demand remains excellent with boxed beef raging to $340 for choice product. Packer margins will be near $1,500 per head profit. The disconnect between demand and the producer is widening everyday with no progress to show.

 

In my opinion, the fed cattle industry is in a shift from smaller cattle producers to a more vertically integrated model. The family feedyards and custom yards are facing struggles competing in the negotiated cash business. Only the formula traders are managing to catch the premiums by handing over the captive supply to the packer in advance. With the shift away from negotiated trade, cash cattle prices remain well below potential.

 

Futures prices are chopping in a range with premiums for the deferred contracts. Many believe the cattle industry will work itself out and have a better future, but that turnaround keeps getting pushed down the road. Feeder prices last week showed an uptick with some larger runs noted...

 

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