By Kim Watson-Potts, Beef Today
The last few weeks live cattle futures prices have dropped from the upper $90s to the lower $90s following Memorial Day, typically a time when retailers are expected to move more beef. (Click here for current prices.)
"Overall, however, it has been a very difficult few weeks for beef producers who have seen nearby live cattle futures go from around $97/cwt in early May to current sub $90 levels," according to the CME Group's Daily Livestock Report, analysts Steve Meyer and Len Steiner with Paragon Economics, Inc.
"While one may attribute some of the decline in cattle futures to the sharp slide in equity values and the rocky currency markets, we think it does not explain the entire magnitude of the decline. A lot of people were long cattle because a) they thought supplies were tight and b) they thought demand over the summer would be good enough that when combined with the reduced supplies it would support cattle prices in the mid $90s. Facts on the ground, however, seem to have poured some cold water on those plans, which is why we have seen those longs pare back their positions."
So has this cold water completely dampened the the cattle market? Not necessarily.
Yesterday's World Supply and Demand Estimates were favorable forecasting total U.S. meat production for 2010 to be reduced slightly. This was in part to lower cattle slaughter and lighter cattle carcass weights in the second quarter and lower expected slaughter in the fourth quarter, according to the WS&D report. Beef exports were up, while imports were down.
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