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Varileks Cattle Call
6 - 12 - 26
Just when you thought big headlines could
slow down the volatility,
another story finds its way in. Screwworm dominated the headlines
all week whether it deserved that much attention or not. The
consumer did not scare away from beef which was one of the
biggest fears. Vaccinations, pour-ons, and sterile flies were set into
motion last week. It doesn't have the catastrophic feel that it had as
we led up to the screwworm being in the United States in my
opinion.
Once traders became sick about hearing the
worm news, futures
were able to look at fundamentals. Slaughter numbers still look tight
and feeder calf prices are strong. The United States cattle herd is
still tight and has years before sizeable regrowth is noted.
The big news Friday was a JBS announcement
of closing a packing
plant in Souderton, PA. It looks to be a plant killing about 2000 head
per day of several Canadian cattle. Futures traded lower, but it was
not a catastrophe. The infrastructure is changing in the beef industry.
The United States is the number one importer of beef. Now Mexico
is slaughtering their own cattle and shipping us beef. Will they even
want the border open? The unintended consequences of the closed
Mexican border could be noticed. Pennsylvania is not in the heart of
cattle country, but it can be another burden none the less.
Cash prices were expected higher with asking
prices of $258-260,
but some $255 traded Friday on light volume. It was a
disappointment with most electing to pass. Remember markets are
closed Friday for Juneteenth. Grill some extra steak, so we can
make it a celebration with beef. Have a good week.
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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