Beef Supply Surprise

Published on: 11:52AM Jun 05, 2009
The chart of the week is the year to date change in the number of prime cattle slaughtered in 2009 compared to prior years. As noted in the latest issue of the Weekly Commodity Report, the percentages of cattle grading choice and prime are trending well above average levels for this time of the year. And as written in previous notes, despite the 4% decline so far in overall beef production, our models suggest that prime and choice beef output are somewhere around 3% higher than a year ago. If you compare 2009 to 2007 thus far, choice and prime beef output this year are more than 10% greater than 2 years ago. Now it’s true that the US cattle herd is contracting and beef production levels could be down for some time to come. But the trend of more cattle grading choice and prime appears to be solid which, if it continues, could notably dampen any inflationary impact on many beef markets going forward.
These comments and data are provided for information purposes only and are not intended to be used for specific trading strategies. Past financial results are not necessarily indicative of future performance. Any examples given are strictly hypothetical and no representation is being made that a person will or is likely to achieve profits or losses similar to those examples. Neither the information, nor any opinion expressed constitutes a solicitation to buy or sell futures or options on futures contracts or OTC products. Covered parties (as defined below) shall not be liable for any direct, indirect, incidental, special or consequential damages of any kind, whatsoever (including attorney’s fees and lost profits or savings) in any way due to, resulting from, or arising in connection with this email, including it’s content, regardless of any negligence of the covered party including but not limited to technical inaccuracies and typographical errors. “Covered Parties” is defined as American Restaurant Association Inc., ARA Trading and the employees of both companies. Commodity trading involves risks, and you should fully understand those risks before trading.