Seasonal pressure expected to weaken beef and cattle markets

Beef and cattle markets have defied “economic gravity” by staying stronger, longer than most analysts expected this spring, but seasonal pressure has caused the markets to weaken and they likely will struggle for the next six weeks or so.

“Beef markets often weaken during the time period between Independence Day and Labor Day,” said Derrell Peel, Oklahoma State University Cooperative Extension livestock marketing specialist. “The summer slump may be mitigated somewhat if July 4 beef sales are strong, which may prompt follow-up sales.”

Typically, wholesale markets struggle until August when Labor Day purchases will pick up to support beef features for Labor Day, the last big grilling holiday of the summer. Cash fed cattle prices have correspondingly dropped more than $10 per hundredweight over the past 10 days as of this writing. Feeder cattle prices have dropped $10 to $12 per hundredweight in the past week.

“Domestic and international beef demand will continue to be a key as beef supplies will undoubtedly continue to increase year over year in the second half of 2017,” Peel said. “Recently released retail meat prices show that Choice and All-Fresh retail beef prices increased from April to May. Choice retail beef prices in May were up 1 percent from last year while the All-Fresh retail beef price was down 3.9 percent year over year.”

Beef production for the year to date in 2017 is up 3.8 percent, with cattle slaughter up 5.7 percent but being offset by sharply lower carcass weights so far this year. At the current time, steer and heifer carcass weights are down 17 pounds on average from the same time last year.

“Steer and heifer carcass weights bottomed seasonally in early May and are expected to increase seasonally into the fourth quarter,” Peel said. “However, a normal seasonal increase from current levels would still have carcass weight down significantly year over year and will continue to moderate larger slaughter numbers.”

Source: Drovers