The boxed beef numbers are troubling to Allendale. Though first quarter beef production was up 3%, the amount left after exports and dumped on consumers was equal with last year. Take a look at the table following this article and the trend in retail choice beef prices over the past three months. This confirms our fears the economy is constraining demand for the high end product. Fresh beef is a composite of choice grading meat along with all other cuts including ground beef. You can note the fresh composite price is holding steady. This suggests consumers are propping up the lower end cuts aggressively. This data set confirms consumers are switching from high priced beef to lower priced beef.
Here is what we do know. Wholesale beef prices continue to appreciate on warm weather demand. Beef supplies will stay moderate through this month then absolutely balloon starting next month. Cash cattle will likely trade $1 to $2 higher on Friday from the $87 last week. Here is what we are not sure about. As noted in our morning report, there are strong rumors running that a deal COULD be possible between the US and South Korea. Their president is coming here to meet with President Bush on Friday and Saturday. We would like to believe it will happen but have been burned so many times we will reserve judgment. Until we get confirmation of any deal with South Korea we have an $82 to $85 objective on the June futures. For speculative trading, the bulls are in control for now. However, this recent rebound may be a time to start establishing bear spreads for speculative positions. For the post-summer period we are flat out bullish.
Allendale's estimate for this Friday's Cattle on Feed is as follows. On Feed on April 1 is 101.7% with the trade average at 101.3%. Placements are pegged at 96.1%, with Marketing at 99.4%. The average trade estimates are 92.4% for Placements and 97.9% for Marketed.
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