In The Cattle Markets – Summer Plods Along
We are three weeks and a day into summer and the prior week was not so eventful for cattle and beef markets. There continues to be a mix of bullish and bearish news to consider. So what do the fundamentals and technical say?
Marketings and slaughter continue to be strong over the spring and summer. These volumes are solidly above last year. And the most important details from last month’s USDA Cattle on Feed report communicate that market-ready inventories continue to be drawn down from the excessive levels established since last fall. It has taken roughly a year for the market to work its way through this wreck. It takes strong marketings, light placements, and solid downstream margins for these situations to get cleaned up. All but the lighter placements have played out this spring and summer. Demand has also been solid. Beef prices have held strong in the face of stronger than prior year slaughter and meat supplies. The Choice-Select spread has returned to more normal but also solid levels. The prior week was $13-$14 per cwt – which is still strong – while the three weeks prior were above $20. Hide and offal values have held steady the last month and the most recent trade data for May – released last week – show beef meat product exports up 15% over the prior year. Thus, there is good evidence that domestic and international demands are strong. But late summer and early fall is the critical time wrecks usually start and this time period is some weeks off.
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