Memorial Day weekend is typically the biggest beef consumption weekend of the year, with Independence Day likely being the second most active. Thus, history strongly suggests retailers will be buying beef quite strongly over the next six weeks. The problem for producers and the packing industry remains the greatly elevated cost of beef in grocery stores, which is rather clearly stifling consumer demand. Still, spring grilling demand should provide considerable support for prices, but cattle prices traditionally move lower through spring as weekly cattle slaughter climbs to summer highs.
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Although this week’s futures losses seem to have developed substantial downward momentum, the 10-year average implying an approximate $11.00 cash-market drop from the spring high ($143.22) to early-summer lows (around $132.00) suggests June futures at today’s settlement have largely incorporated the seasonal decline. Thus, June futures may not have a great deal of downside risk from this point.
