Call the Market

Any market, at its most basic level, is controlled by supply and demand. But, unfortunately, the intricacies of our complex, ever-changing, fast-paced world have made it so markets cannot solely be examined by those factors alone -- although they still gravely dictate the general direction in which the market will trade.

It's common knowledge the cattle complex is at a unique crossroads as the U.S. beef cowherd sits at a historic 60-year low and, all in all, beef demand has remained strong amid our stressed and inflated economic state. But seasonalities are something else the market heavily relies on, especially in the form of demand.

Packers schedule their kills while managing the influx and outflux of fed cattle supplies around consumers' normal buying patterns. But in years like this, forecasting demand becomes a greater challenge, and some have even dared to wonder if we'd see the market's normal seasonal demand perk up during this time.

Thankfully, with this week's trade and the prices reported for beef, we're able to ease some of the concerns and confirm that, yes, seasonal beef demand is beginning to develop.

At Tuesday's close, May 7, choice cuts were quoted at $298.49, $5.59 higher than last week's low; select cuts closed at $292.34, $4.69 higher than last week's low. The week's slightly higher prices may not seem like much, but to a market worried about whether seasonal consumer demand would show up, it's the beginning of an answered prayer.

Strong seasonal beef demand usually ranges from the beginning of May through Memorial Day and into the first couple weeks of June as retailers stock their coolers full for prime grilling season. In the 2023 spring rally, choice boxed beef prices rallied $33.07 from May 1-June 16. However, in 2022, the spring rally in choice cuts only gained $9.19 from May 1 through the first week of June.

Consumers have already shown they're not willing -- or able -- to spend as freely as they have in years past and it would be surprising if the market came close to challenging the 2024 choice top of $313 logged in March. Regardless of where the May/June rally top lands, seeing demand increase will help the overall market as it will encourage packers to continue to procure cattle in the cash sector and possibly allow feedlots to advance live cattle prices before showlists expand over the dog days of summer.

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

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