Futures markets are still watching the situation in Ukraine but are getting used to the ongoing turbulence. High energy prices are a problem for aggregate beef demand. The events of the last two years did not break the desire to eat quality beef. However, the threat of a deepening war or recession are two of the biggest threats to changing beef consumption. These are cases over which a manufacturer has no control, but we have the ability to reduce our exposure if necessary.
Live cattle cash prices were again stable with trades of $138-139 across the country. $140 trade takes place in the east, with tight supplies noted. Negotiated cash still seems unable to push cattle prices on a spring rally. Packers don’t bob up and down with bids, and cash deals hit the sell button as soon as a price is offered. Everyone keeps saying we’re 2 weeks away from tighter numbers but I myself have a slight attitude problem, hasn’t that been the slogan for the last 2 years. The growers don’t seem to have a market to influence from the packer.
With the steady trading of cash, futures have remained in a sideways movement with no real direction. The funds have unwound some length due to external market volatility and a lack of news to feed the bull. Deferred contracts traded more steadily, with December futures near $150. Filling empty pens will bring breakevens commensurate with these higher prices, but uncertainty in feed costs increases risk. Increased slaughtering of cows and heifers will continue to provide optimism for future cattle prices. Have a nice week.
Scott Varilek, Kooima Kooima Varilek Handel
The risk of loss when trading futures and options is significant. Every investor has to weigh up whether this is a suitable investment. Past performance is not a guide to future results.
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