Spot cattle prices finally changed their needle last week after remaining flat for almost 7 weeks at $ 180 dressed and $ 114 alive. The north saw an increase in turnout and interest from packers with offers of $ 185 dressed and $ 115 to $ 117 live. The best part was the active bidding from multiple packers. Northern producers haven’t had this kind of interest for a long time, as it was rumored that the packers were small cattle.
Carcass weight is part of the reason spot prices are rising. Producers have finally hit year-ago levels on feeder cattle, and the $ 5.00 corn is helping the cause keep the cattle moving. The cost of feed is included in new feeder purchases, but many are not for livestock ending this spring.
The open interest in live cattle remains at a level that can be maintained with funds for a long time. Over-the-counter and over-the-counter operations appear to be a growing part of the industry. It might be a new term for many of you, but it’s also known as swap broker. This is another way for large trades to enter into transactions through a swap trader to offset risk. If you’ve heard of accumulators from your local grain elevators, this is an example of such a business. Swaps have become a bigger part of the market and offer many new trading strategies for producers.
Demand seems to remain excellent for beef! Grilling season has arrived and consumers are ready to go out and splurge after a year like no other. New stimulus money for the public could help some portfolios. More COFOG payments for agricultural producers are also underway after an announcement last week. Fill the propane tanks and let us grill.
Scott Varilek, Kooima Kooima Varilek Trading
The risk of loss when trading futures and options is considerable. Every investor should consider whether this is a suitable investment. Past performance does not represent future results.