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What’s causing beef markets to spike upward?

Profit Matters 5-10-17

Thanks to Ron Hays for interview

For four weeks in a row, producers have watched cash cattle prices climb higher, as much as $20, with the highest price levels since August 2015.

Wholesale boxed beef trade also performing well lately, up over $16 last week alone, and starting this week another $2-3 cwt higher on choice and select box beef trade.

Jim Robb of the Livestock Marketing Information Center tries to get a handle on what is causing this unprecedented upward movement in the market.

“The reasons we’ve had this rally are largely tied to our marketing rate,” he answered pointing to the needs of packers and a very current market situation. “The other thing we’ve had this year that has added on – a lot of hedged cattle this year.”

Robb continued describing more or less a chain reaction in the market from the hedging that impacted the basis, causing a rally in the futures which led more cattle being sold to packers early on rather than being delayed.

But Robb says patterns like this tend not to perpetuate.

According to him, this feels like a spike in the market more than anything, noting that if you dig deeper, volume numbers seemed to evaporate.

“It took four or five of these factors to come together to get us here,” he said. “Can they perpetuate? I think some can, but this type of percentage increase tends not to perpetuate. That doesn’t mean that we’re not going to still be profitable feeding cattle, but the meat market headwind I think is probably the dampening force.”

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