Analysts Predict Continued Strong Meat Demand This Summer

May 27, 2015 07:00 AM
 
Analysts Predict Continued Strong Meat Demand This Summer

Beef prices may be climbing, but as summer grilling season begins, Americans are showing little sign of sticker shock at the butcher shop so far.

“We’ve seen beef demand be fairly elastic with high prices, mainly because the U.S. economy—at least if you look at the stock market—is very good, so we’re willing to spend a little more money on burgers and steaks in order to do the backyard grilling and things like that,” said Ted Seifried, chief market strategist for Zaner Ag Hedge Group, on U.S. Farm Report Saturday. “We’re certainly not cutting our demand when we go to McDonald’s and places of that nature.”

Fellow U.S. Farm Report panelist Mark Gold of Top Ag Marketing also expects this summer to be a strong one for livestock producers and meat demand, with continued price gains.

“We’ve seen record prices on the wholesale level in this past week, so there’s no reason to think we can’t see some more,” Gold said.

His one worry? The gap between cash and futures prices. “The only thing that concerns me about this meat market is that we’ve got the cash so far over the futures. There is a $10 discrepancy between the prices,” he said. “I’ve been saying that I thought the futures price could come up a bit (and) maybe the cash (price) could back off a little bit.”

Seifried is watching those numbers too. “I agree that I think we could see cash prices soften here at some point soon and see futures and cash prices come in a little bit,” he said. “Longer term, it’s really tough for me to be bearish on cattle as a whole, especially as we go through the peak demand season.”

Listen to their discussion on U.S. Farm Report here:

The market for other meats is a little less straightforward.

Consumers are getting pork at bargain prices and are likely to continue doing so, thanks to producers who overcompensated for the risk of losing animals to the PED virus.

Meanwhile, prices are on the rise for eggs, chicken, and turkey products due to the avian influenza outbreak. The deadly virus is now responsible for the destruction of 40.7 million birds as of May 21. Farmers are already warning that there could be a shortage of Thanksgiving turkeys this November.

As bad as that news is for turkey producers, it’s good for hog farmers in the months to come.

“We’ve seen the price of chickens come up,” Gold said. “That can’t be anything but helpful for particularly pork out here. ... As long as the stock market stays good, the beef demand can stay good. If something cracks the stock market, then we could see a backing off on the demand.”

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CHRISTIAN EDWARDS
gay, AL
5/27/2015 10:05 AM
 

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