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Demand Props Up Beef Market

posted on October 31, 2003


Florida citrus growers face the opposite problem. They're on target to produce the largest crop in the state's history, some 252-million boxes weighing 90 pounds each. That's 25 percent more than last year's harvest.

As a result, prices have plunged. Orange juice concentrate, which sold for 90 cents a pound last year, might go for as little as 65-cents a pound this year.

Other commodities flirting with production highs have fared better. In a week where the beef checkoff program won extended life through a federal court ruling, the beef industry rode strong demand to some record slaughter numbers.

 

Demand Props Up Beef Market

USDA says beef production in the U.S. is at an all-time high. Commercial red meat production in September totaled just over four-billion pounds. That's 3 percent above September of 2002 levels.

Nationwide, 3.12 million head of cattle were slaughtered with average live weights down by some 36 pounds from the previous year. That indicates producers are sending some cattle to market before their peak weight gains.

Indeed, the latest Cattle on Feed Report released earlier this month showed a 13 percent jump in September placements. That marks the seventh straight increase in monthly placements.

Some analysts believe the increased production and placement levels will put the brakes on the bull market in cattle. Futures prices already have retreated somewhat from contract highs seen in mid-October. Even so, deep discounts in futures leave most of the risk in cash basis. That's because deferred futures have lagged behind soaring cash markets, denying some hedging opportunities.

Still, if anything can prop up the market it's demand and a lack of competition from abroad. Imports of Canadian live cattle remain banned following the discovery last May of a single case of Mad Cow disease in Alberta province.

 


Tags: agriculture animals beef cattle livestock Mad Cow meat news USDA