- Cash Last Week ranged from $121 up to $125
- Cash trade this week coming in the range of $122-125
- Choice Boxes ended yesterday at $280.02, select at $258.70
- Weights estimated for last week at 1369 compared to 1388 last year
- Slaughter last week estimated at 657,000 head, up from 637,000 last week
Did you all hear about the bad weather recently? I read it was so bad that many of the pilots with Southwest Airlines decided it was too dangerous to fly. Im still laughing about that excuse today. But what you are seeing is a real issue Ive brought up multiple times. This vaccine mandate is a real problem. You have well paid commercial pilots walking off the job because they dont agree with their companys vaccine policy. Then the CEO of Southwest comes out and says hes only following the Presidents orders. Some of you may know a nurse that lost their job because of the mandate. And this isnt just happening in one profession, or even one country. Any of you watching Australia? Im just thankful we still have Uncle Smith and Cousin Wesson. This chaos is happening everywhere. We had a term for this growing up, Def Terb!!!
November 1st is the day, Im told, that workers must be vaccinated or lose their job. Tyson was the first to implement this policy, and if I remember correctly, before Uncle Joe did. First risk is strike. Unions all across the country are backing their employees, and demanding companies rescind their mandates. If the workers in our processing facilities go on strike, chain speed will slow to a crawl. That first risk is the lesser of the two. The second risk, is termination, voluntary or involuntary. That is going to require some major recovery time, as you cannot turn new hires into expert meat cutters overnight. Last night, for the first time ever, I watched a Tyson commercial, not advertising meat, but looking for help. They are paying for prime time commercial space to run help wanted adds. I cannot stress how big of an issue this could end up being. Be prepared, the same weather those pilots wouldnt fly in, is headed to a packing house near you.
Source: QST
The December Live Cattle Chart shown above is very interesting. You can see support has been down at $125, while heavy resistance sits just slightly above $130. With cash parked just below $125, I am anticipating a bump coming in the next couple of weeks. October-December normally posts your worst basis trades. Pretending everything in the world is fine, lets say cash is supported at $124 through the end of year. Supportive cash could lead some buyers back into the futures market. New buyers step in, futures get a bump, and we have our negative basis. Happens almost every year. One of the reasons I believe this is possible, is cattle on feed. Next weeks report will not likely be bullish. And that is priced in already. The following months report is being traded now. Placements, during the month of October, are going to be low.
It is obvious that the drought brought calves early this fall, and eventually that is going to show up. Novembers report on Octobers placements and On Feed, is likely to be bullish. Keep those puts on, slaughter drives this market. But think about turning those puts into put spreads very soon. Cautiously Optimistic is the strategy going forward.
Stepping into the Sandhills this week with a Feeder Quote. 78 Red Hided Steers weighing 669# brought $163.00. Those boys return $75/hd with a zero basis in May, and a 95 cent CoG. Think of the fun with a +10 basis..
Looking to Trade or Hedge Cattle Please reach out and let’s chat…
Dan Gerhold
319.320.4774
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