Call the Market

One relentless driving factor of the 2023/2024 cattle market's success story has been boxed beef demand and the incredible price-points the market has maintained. In a time where inflation has stretched consumer dollars thinner and thinner across all buying sectors of the economy, Americans continue to be persistent beef consumers despite the high cost of beef.

It was just last Friday (2/23/2024) we saw choice cuts break through resistance at $300.00, which the market hasn't consistently done since last October. February isn't usually a month that sees tremendous beef demand as the market isn't supported by big holiday sales and consumers are usually huddled around their warm fireplaces, dreaming about summer days when the grill can be stoked, and a juicy slab of beef is spread across the grate to share with family and friends.

The real kicker of the market's current situation is trying to understand how packers will manage their position. Given how thin the industry's supply of market-ready fed cattle is, packers have worked tirelessly to try to keep cash cattle prices from accelerating and getting any higher. They've been somewhat successful by cutting production and limiting the sheer amount of cattle they need to slaughter on a daily basis. But this is where managing the market feels much like walking across a sheet of thin ice for them.

On one hand, they'll want to keep just enough product available to consumers that prices stay high; but if they get too greedy, they run risk of consumers electing to choose another cheaper protein alternative. On the other hand, if they produce more meat to try to capitalize on these strong boxed beef prices, they'll likely have to buy more aggressively in the cash market, which pulls on their bottom line.

I've had several people ask me where the consumer breaking point is as it's nearly unfathomable to comprehend that beef prices are as strong as they are given our weakened economic state. While I wish I knew what that threshold or price-point was, it's nearly impossible to say how the U.S. consumer will elect to spend their dollars. But for the market's well-being, seeing this type of beef demand is a sheer blessing as it's keeping packers engaged in the cash market, which is allowing feedlots to capitalize on strong sales and continue to procure feeder cattle more aggressively than we've ever seen.

As a side note, I'd be remiss to neglect to mention the fires currently burning through the Texas panhandle, Oklahoma and in Nebraska. Our sincerest thoughts and prayers go out to everyone affected by these fires. Click here to read DTN's coverage of the current widespread wildfires: https://www.dtnpf.com/….

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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