Will Major Market Jump Continue to Benefit Us?
By Jeff Rose
We are right in the middle of a major market jump as I write this article. Cash cattle trading is at $177 and futures not really keeping pace.
April 2023 gapped higher and is at an all time high near $171. On-feed numbers will likely continue to tighten and carcass weights are also down, restricting supplies.
If the drought eases and heifers are held for replacements, supplies will get even tighter. The big question when we get these kind of rallies is always, will demand hold up at this price level?
It’s definitely a positive that we are seeing signs of warmer spring weather and grilling about to start. However, export volumes have slipped recently and packers are reluctant to add Saturday kills, claiming that boxes are backing up in the coolers. Let’s hope the good weather helps clear the supply chain.
The meat-eating public has been resilient with beef demand despite inflation and interest rates. How much longer can they keep this up?
Some believe supplies will decline, despite feedlots moving to feed cattle longer to heavier weights. There is a good chance beef prices will push higher, but we don’t really know if it will be high enough to lower our appetite for beef.
Most of the conversations I am having with producers are more optimistic than the last few years. Cattle can be locked in at a profit and many already have been.
A lot of people, of course, wonder how high the market will go. We are usually pretty conservative and recommend locking in a profit when you can, but if your financial situation is solid enough to allow it, now might be a good time to leave a small portion of your production unpriced.
We look for that market to also get stronger as grilling season approaches. Stay in touch with your marketing representative.