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Agricultural News

Kevin Good of Cattlefax Still Optimistic Beef Will Trend Higher After Third Quarter

Wed, 04 Apr 2012 15:41:33 CDT

Kevin Good of Cattlefax Still Optimistic Beef Will Trend Higher After Third Quarter

Cattle markets in the first quarter of the year have offered some surprises and Kevin Good of Cattlefax spoke with Ron Hays at the recent Texas Southwestern Cattle Raisers annual meeting. Good says there are several things to take into consideration when looking at the markets coming out of last year and into the first quarter.

"We sure thought that prices would be higher as we came into this year. That was definitely the trend. It exceeded our expectations as far as the magnitude of the push in the market. We've got to remember any more the markets are very directional. They're either going up or they're going down.

"We got a sharp rise in the first half of the year. There's some concerns, though, as you look at the price levels we pushed to.   Fed cattle got to 130 before they hit a brick wall and now they're trending lower, you know, from spring to summer. I think we've got to recognize that as the top side of a range here for awhile. We tried to push beef and got it up to two bucks on the cutout and it ran into a brick wall. So we've got to be concerned about that as far as the barrier on the top side."

It appears that the highs normally seen a little later in the year arrived somewhat early this year. Good says that seems to be a new trend not just with highs, but with the markets in general.

"What the markets have done over the last couple of years is we've built in the good news 30 to 60 days early. In other words, we put the highs in 30 to 60 days before our tightest supplies. We do that a lot of times on the lows as well. The market anticipates that and that's what happened again this year. The good news was built in early and we ran out of gas."

So where does that leave Good and his annual forecast which seemed a little more optimistic than what the markets are currently reflecting?

"I think we were talking 122, or so, fed cattle values for the year. If there's anything that's changed since then, we might be just a tick not quite as optimistic for a couple of reasons:    Your imports are increasing at a faster pace than we would have thought and it just goes back to the value of U.S. trim beef which is record high. You can import Australian product in cheaper than you can produce it domestically, so we are getting more imports in than we would have thought two or three months ago so that's going to add to that net beef supply as well as the fact that our carcass weights are running about 19 to 20 pounds above a year ago. So, a little more tonnage because of weights. Because of that we have a little more product to go through here over the second and third quarter."

The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network- but is also a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show- and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.


Kevin Good speaks with Ron Hays about trends in the domestic beef market.
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