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Price Fatigue, Falling Demand Dog Beef Market

posted on September 17, 2004


Harvest-time always brings unique pressure to bear on grain and oilseed prices. Throw in a few outside factors and things can get bearish in a hurry.

For example, Asian feed demand is down 10 to 15 percent this year ... and the August crush totals from NOPA fell short of trade expectations.

Those supply and demand fundamentals also are at play in the cattle market, where beef producers this week pondered the latest feedlot inventory from USDA.

Price Fatigue, Falling Demand Dog Beef Market Though beef prices have found support following a month-long decline, the post-Labor Day slump in beef demand appears under way. According to Doane's, Tyson Foods expects retail demand to shift from beef to pork this winter, due largely to "price fatigue."

That notion was borne out in the release Friday of USDA's September cattle-on-feed report. The inventory revealed total cattle on feed at 101 percent of a year ago ... the number placed at 88 percent ... and the number marketed at just 93 percent.

Analysts say an increase in the on-feed population is NOT unusual at this time of year, but noted that it's usually driven by higher placements, not lower marketings. But it was the fifth straight month of smaller than 2003 marketings ... and a third consecutive month for lower placements.

Traders cited a number of reasons why feedlots were reluctant to move livestock last month: Revenue from fed cattle sales was dropping, feeder costs remained high, and replacement numbers were tight.


Tags: agriculture animals beef livestock markets meat news