Will the cattle industry see better times soon? Since the lows of Dec. 5, 2008, cattle futures have been in a sideways range. Rather uneventful.
Try saying that to the feedlot managers and producers of feeder cattle.
Exports of beef have remained about the same as they were the previous week. Meanwhile, pork is accumulating in the coolers as demand for pork domestically is not able to keep pace with the slaughter and soft exports. It is common knowledge that supplies will tighten into fall, even though feedlots appear to be holding cattle back with lighter feeding rations to stretch them into September and October because of the premium price structure.
Beef packers are profitable and appeared June 26 to push bids up to $82 for cattle in parts of Texas and Oklahoma. Still, the basis is in line and, actually, I look for futures to be premium to cash into the fall.
Resetting demand
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It should be no surprise that total meat production for the next few years will be lower. Couple that with the potential of global economies stabilizing, and pent-up demand should send this market through the roof.
Deferred hogs share this sentiment. We need to keep an eye on beef cow liquidation as that could be about done and we just have to deal with the dairy cow liquidation.
Because of drought that continues to plague Argentina, the beef herd appears to be in a major liquidation. Usually, by July 2, fat cattle prices tend to put in a low and lift. So far, $80 cattle prices have held. Should that level come out, it would be possible to see a test of 76 cents, but my timing indicators are nearing an opportunity to turn positive. Not quite there yet, but close.
