The reopening of the economy and recovery from the impacts of the coronavirus pandemic will be key in driving beef prices in the coming months, University of Tennessee ag economist Andrew Griffith says.
The beef cutout market has started to show some momentum as spring has arrived.
“It was mentioned last week that the composite Choice boxed beef price could test the $250 mark this spring,” Griffith said in his weekly market outlook. “It is beginning to look like that may have been undershooting the market in that the daily price has nearly reached that mark. The rib and loin primal contain the cuts that will carry the cutout the next few months, and they are beginning to gain momentum.”
With warmer weather returning, some other cuts will be an important part of the overall beef market picture.
“The brisket and short plate primal are also gaining steam and could provide price support for early spring grilling,” Griffith says.
Restaurants and consumer spending habits will be important to sustaining beef prices going forward.
“The two drivers of higher beef prices are likely restaurants increasing dining capacity and consumers continuing to use discretionary spending on their eating experience since many do not feel comfortable traveling yet,” Griffith says.”
The return of baseball season with fans, and the indication stadiums will increase capacity as the season goes on, should provide additional support for beef prices, he says.
Analysts and livestock producers will continue to watch the impacts from the USDA planting intentions and grain stocks report. Griffith says the reports sent corn and soybean prices up the limit on the first day of trading, but then had “a much more muted reaction” the next day. He expects more volatility, but there is room to speculate.
“An increase in acreage should result in increased total production and thus lower prices,” he says. “At this point, this is all speculation. What is known today is that some extremely favorable prices for selling corn, soybeans and feeder cattle can be captured today by using the futures market or forward contracting.”