Hopes of firmer U.S. cash cattle prices next month will be dashed unless beef demand picks up soon.
Analysts predict that grain-fed cattle prices should trade in the mid- to high $70 a hundred pound the next 30 days. Fed steer prices posted a top of $77.50 in Kansas Tuesday, compared with $77 a week ago, the U.S. Department of Agriculture said.Those predictions are based on seasonally tight market-ready supplies and anticipated strong retail beef demand in May. But some analysts believe it's demand that will make or break the cash market next month. "Demand is the real issue facing the cash cattle market nowadays," said Andrew Gottschalk, an analyst with Kemper Securities Group, Blunt, Ellis and Lowei division.
Boxed-beef movement was active Tuesday, the U.S. Department of Agriculture said. However, one Midwestern retailer said the strong beef movement came at the expense of lower wholesale prices, indicating that packers were trying to clean up burdensome supplies.
Wholesale beef prices have edged lower the past week. Heavy choice cut-out values were quoted at $118.29 Tuesday, compared with $119.47 a week ago, USDA said.
Some analysts expect a surge in beef demand the next couple of weeks on ideas increased supplies will be needed for Mother's Day, May 10, and Memorial Day, May 25, usually big holidays for beef consumption.
Unless buyers start aggressively booking orders for beef the next couple of weeks, the month of May will wind up as another month of sluggish beef demand. ''If we don't see an increase in demand, this whole thing (fed cattle market) is not going to hold up together very well," said John Nalivka, executive vice president of Sterling Marketing Inc., a Lenexa, Kan., Agribusiness consulting firm.
Softer beef demand has forced meat-packing companies to cut slaughter operations in an attempt to bolster depressed profit margins. Reduced kills and ample contract cattle supplies in April allowed packers to push fed cattle prices lower this month.
There are various reasons why beef demand has fallen short this year: stiff competition from record numbers of lower-priced pork and poultry products, retailers resisting paying higher prices for middle cuts of beef, striving for larger sales volume, and a weak domestic economy.
Reduced demand for beef this spring also was blamed on the Easter holiday being observed later this year, which placed more of an emphasis on featuring hams and turkeys than beef, and less-than-favorable grilling weather in many parts of the United States in April.
And if beef didn't have enough problems, analysts also are worried about the public's reaction to a story on the beef industry scheduled to be broadcast Thursday on ABC's "Prime Time Live." The program is being hyped by the network as an expose of food safety problems in U.S. meat-packing plants.