Even after a sizeable setback, cattle markets still face the risk of downside price movement this summer, said Scott Varilek of Kooima & Kaemingk Commodities on Tuesday’s AgriTalk After the Bell with Chip Flory.
Varilek argues feedyards have done a great job of keeping marketings current, but slaughter numbers continue to climb, potentially overwhelming capacity.
What makes this combination really “strange,” said Varilek, is that it comes at a time when beef packers are clearing about $300 per head in processing. He said, “That ought to help limit the pressure on cash bids, but there’s plenty of cattle to go-around right now.”
Varilek said he expects a steady-to-lower cattle market into the middle of July. At that point, a slight tightening of market-ready cattle supplies should help cash bids bottom. Of course, he warned, beef demand will play a major role in keeping packers interested in processing.
Michael Clark, meteorologist at BamWX.com, also joined AgriTalk After The Bell, to talk about some major differences between the GFS and European weather models. Currently the GFS is calling for heavy Illinois and Indiana rains between now and this weekend while the European model remains dry, especially in the central and western Corn Belt.
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