The Memorial Day holiday is one of the more important weekends for retail grocery meat counters. As the unofficial start to summer and the more extended use of back yard grills, meat sales can jump, extending cash flow and profit margins.
The success of the grilling holiday and beef demand will be assessed over the coming days, but early clues can be gleaned from daily USDA-Agricultural Marketing Service data about spot-market sales and prices. If reported sales and prices go up, it can be correlated with anecdotal evidence to conclude that weekend retail sales exceeded retail meat-manager expectations and that beef and cattle prices will go up in coming days and weeks.
Because it makes a difference to beef and cattle traders, analysts will be studying anything they can to deduce the likelihood of an active grilling holiday.
Enter tropical storm Bonnie.
Bonnie entered the US in South Carolina bringing torrential rain and flooding to the Carolinas and large portions of the Eastern Seaboard. The weather in this portion of the country was not conducive to grilling, to say the least. Even areas that did not see actual flooding got heavy rain that would have interfered with outdoor activities.
Large parts of Texas also were inundated with heavy rain and flooding.
But such extreme weather was not present in all parts of the country, at least not for the whole weekend, and most people aren’t tied to a specific time during the weekend when they have to partake of their grill-based meal. One day of mild weather will be enough, and this makes it difficult for beef and cattle market analysts to get a solid idea of weekend movement before the other guy.
SOLID WEEKEND EXPECTED
A graph of USDA-AMS weekly prices for choice 600- to 900-pound boxes of choice boxed beef shows meat buyers were planning for big holiday features. Prices rose $20.00 per cwt, or 9.72%, in just two weeks to $225.72 from the annual low so far of $205.72 the first week in May.
However, the graph shows a clear, though convoluted, counter-seasonal decline in prices since peaking at $231.77 per cwt in mid-March. Much of this decline may have been because of rising supplies with increased slaughter, but counter-seasonal price declines are never thought of as good things to cattle or beef sellers. Still, prices remain above the 2010-2014 average.
Last year, the choice cutout also saw a counter-seasonal price decline, but it waited until the Memorial Day holiday was over to commence. In addition, it brought prices back down closer to the five-year average, an area that might be considered “normal.”
Such a decline might be expected again this year as supplies continue to increase with a growing US herd, and it might have started earlier for the same reason.
CASH CATTLE MARKET LOWER
Cash cattle markets last week were $6 per cwt lower at $125 to $125.50. A few trades were reported in dressed markets at $204, steady to $2 lower.
The USDA’s choice cutout Friday was $0.65 per cwt lower at $222.07 per cwt, while select was off $1.69 at $201.57. The choice/select spread widened to $20.50 from $19.46 with 92 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Thursday was $146.09 per cwt, down $1.51. This compares with the May settlement Friday of $146.09, up $0.19, and the Aug settlement of $146.70, up $1.30.