Beef demand continues at such a solid pace that it seemingly defies logic, with the CAB cutout value now 41% higher than a year ago. Beef buying ahead of Labor Day has proven stronger than high prices suggest it should be.
This summer many of us have had our eyes on carcass weights, grading trends and days on feed as they relate to the fed cattle sector. These factors have been set on abnormal paths since the onset of the pandemic and accompanying backlog over a year ago.
At last, the perfect storm occurs. On average, annual peak demand for highly marbled middle meats happens at the same time that the supply of those carcasses is near annual lows.
Today’s fed cattle market is the epitome of finding a silver lining. On one hand, the vast majority of cattle producers aren’t as hoped compared to the demand seen on the consumer side. There is much desire for your product and packing sector throughput is mostly unable to match supply or demand.
As we look at demand for Select beef, it’s important to realize supplies have dramatically decreased. Price and volume are the two drivers that define demand.
The cattle business year in review is painted primarily with COVID-19 irregularities. A year ago few could have imagined the more widespread and lasting pandemic impacts that lay in wait.
Cattle and beef markets the past two years have conditioned us to expect the unexpected. Several fundamentals are “upside down” in the total beef complex, but a few are behaving in relatively seasonal fashion.
The beef industry finds itself in another odd position as market values are adjusting swiftly. Feed grains continue to react to global supply-and-demand dynamics with a bias toward even higher corn and soybean futures prices.
The shift away from larger availability of yearlings to the new crop of spring 2020 calf-fed cattle is beginning. This is the early stage of this seasonal trend, with more to come as April progresses.
Demand for quality is good, based on elevated quality premiums in the past year. The advantage will potentially be back in the hands of feeders with genetically higher-marbling cattle, rather than cattle that must be highly managed through the feeding regimen to reach the premium grades and CAB.
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