The fed market saw the futures market set or approach contract highs again this week. Meanwhile, boxed beef prices rose sharply following the Labor Day Weekend, indicating clearance and demand was better than expected (there had been concerns that with the East Coast being hit with wet and dreary conditions, consumption would be below expectations).
The experts last year told us the highs of the cattle cycle were in. Tonnage and numbers would grow, record energy prices would hurt a demand already weakening with the fading of the low-carb diet fad, and corn would be higher, with significantly less acres being planted. All this meant cattle prices were headed lower.
They were right on every point or assumption, but demand continues to surprise despite higher energy prices. The economic slowdown simply hasn't materialized, expansion hasn't continued as expected due to drought, and available supplies of feeder cattle will likely not be any larger this fall as feedyards have already placed record numbers of last year's calf crop.
What's more, near-ideal growing conditions in the eastern Cornbelt are hinting at an approach of last year's record harvest, on fewer acres. Export markets are reopening and the market sails along. Now there are rumblings that if export growth absorbs the extra tonnage, if the resiliency in demand continues, and if expansion finally kicks in with heifers being held back rather than heading to feedyards, we may not set new highs but we may certainly test the same levels.
-- Troy Marshall