Wholesale beef prices over the last three days have been higher, suggesting a seasonal rally has begun, but just how consumers will react to higher retail prices still is an unanswered question.
The higher wholesale beef prices may provide enough push to sustain Wednesday’s cattle futures-market gains into early Thursday, but Wednesday’s late-day weakness may keep longer-range cattle speculators cautious.
Midday boxed beef prices Wednesday were sharply higher, with the USDA reporting choice at $240.31 per cwt, up $1.19, and select at $236.63, up $3.43. However, the afternoon report listed choice up only $0.66 at $239.78 and select up $2.65 at $235.85.
HEADLINES WORK AGAINST BEEF
News stories like the one appearing Wednesday on the NBC News Web site could work against beef. The basically well-done piece was written from a consumer perspective and focused on the January USDA Cattle Inventory report. It said because US cattle herds are growing, consumers should expect lower beef prices.
The story said slowly rising cattle numbers mean more beef supply and lower prices. However, the journalistic necessity of backing up the writer’s opening statements about a rising supply meant that qualifying quotes from industry spokesmen were buried.
Many readers may not get very far past the catchy headline on the NBC News home page saying “Why You Should Expect Lower Beef Prices.” When downloaded, the real headline is less catchy but more accurate – “Beef Prices Expected To Head Lower Thanks To Growing Herds.”
And consumers who expect lower prices in the meat case may be more likely to switch to other meats.
EXPORTS REMAIN A WORRY
As the West Coast port dispute drags on and meat exports remain camped in ports, foreign importers are beginning to seek out alternative, more reliable beef sources.
In that vein, the Argentine Ministry of Agriculture, Livestock and Fisheries recently held a beef market access working group meeting, looking to increase beef exports this year, according to Global Meat News. The aim of the meeting was to update the group on the progress being made in certain targeted countries.
The meeting, which included representatives from the Institute for the Promotion of Argentina Beef, involved increased access to the US, Canada, Mexico, the EU, Russia, China, South Korea, Japan, Vietnam and the Philippines, Global Meat News said, all markets for US beef.
At the same time, news reports said Taiwan was loosening its 11-year import ban on certain US and Canadian beef offal and other byproducts. A ban on other internal organs remains in place. The ban was implemented in 2003 after Bovine Spongiform Encephalopathy was discovered in cattle from the two countries.
The lifting is another step in the process of reopening this market. In 2006, a complete ban on beef and beef byproducts was relaxed to allow boneless beef to enter, and in 2009, the boneless portion of the ban was eased.
Taiwan’s move comes in the wake of South Korea’s new ban on Canadian beef after BSE was found in an Alberta cow this month.
CASH CATTLE TRADE STEADY
Cash cattle markets this week are turning out to be steady with light trade in the Plains Wednesday at $160 per cwt on a live basis. No trading was reported in Nebraska’s dressed market with dressed-basis bids at $252 and asking prices around $260.
Feeder cattle futures continued their discount to the cash market with the nearby Mar contract settling up $1.65 per cwt at $203.10 and the CME Feeder Cattle Index at $210.99, down $0.37.