Strong beef demand and a smaller beef supply continue to support cattle markets. University of Tennessee livestock marketing specialist Andrew Griffith says any weakness in markets will likely come from the broader economy.
“The fundamentals of the cattle market certainly support strong cattle prices since beef demand is strong and domestic beef supply is expected to decline due to a smaller cattle inventory,” he says in his weekly market outlook. “The primary factor that could influence or introduce weakness into the market is the general economy. As leadership in the financial institution continues to attempt to curtail inflation with higher interest rates, there is no way to know for sure how this will influence consumers. It will certainly send some sort of ripple effects through the system.”
Griffith says cattle producers are thinking about ways to manage risk as they look to realize higher prices.
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“From the producer standpoint, there is good reason to manage price risk from both the selling and buying side, but at the same time, producers selling cattle have three months of recent history as a reason to continue watching prices increase,” he says. ”
Griffith says wholesale beef prices are not at record levels, which were set at the start of the coronavirus pandemic.
Beef is facing competition from other meat options as protein sources compete for consumers’ income.
“At this time, it may be important to consider alternative meat protein prices as each meat protein is competing for a share of the consumers’ disposable income,” Griffith says. “Beginning with beef, most beef items are trading at year-ago price levels or higher with many trading higher than a year ago. This compares to pork items that in general are trading considerably lower than a year ago at the wholesale level. For instance, pork loin prices have averaged about 10% lower this year compared to last year while wholesale bacon prices have averaged about 45% lower than a year ago. Similarly, chicken breast prices are about 54% lower than 2022.”