Agricultural News
Beef Market Trapped In Narrow Range For Awhile, Peel Says
Mon, 08 Oct 2012 17:06:59 CDT
The price of wholesale boxed beef has been trading in a narrow range between $1.90 and $2 per pound for quite some time. Packers who need to keep a supply of beef in the pipeline are holding the price up, and consumers reluctant to pay more at the store are keeping the cap on.
Derrell Peel, an Extension livestock market economist at Oklahoma State has examined the situation and says in today's Beef Buzz that the past may be prologue.
"We've repeatedly, this year, cycled boxed beef prices up on a several-week, cyclical basis. But once we get above that 195 level, for choice boxed beef, we seem to run into a wall. We've done it several times and immediately, again, there's push back against it. That $2 level for choice boxed beef seems to be a significant point of resistance for us. I think it is inevitable we will eventually go across that although it appears the demand challenges in order to do that are pretty significant and probably or it may not happen this year. It could be next spring before we see that happen.
The fear among producers is that if prices slip below the lower limit, they will drop to the $1.85
range before prices begin leveling out. Peel says he thinks the market won't drop catastrophically, but will stay near where it is currently trading.
"We've seen this kind of cyclical basis. Buyer's are in and out of the market. It's become much more of a norm over the last few years for this market to be more of a hand-to-mouth kind of market rather than as much forward pricing that provides some stability in the market. But, as we move into the last part of the year, we typically see some strength in boxed beef prices simply because of the seasonal supply situation.
"I wouldn't expect this market to fall too far. I think it will take another run at this and that'll be the question here in the last quarter of the year as to what we can put in at that price level based on the normal seasonal pattern."
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.
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