Steak and shake

In the live cattle market, February is not known for boisterous demand, according to Daniel L. Bluntzer, director of research at Frontier Risk Management LLC. But seven weeks of snow, ice and record low temperatures in the Plains has caused real damage to livestock, pushing live cattle prices to more than $95.50 per hundred weight. In addition to deaths caused by the elements, those cattle coming into feedlots do so later, lighter and suffer from slower growth rates.

“There is ample show-list supplies,” Bluntzer says, but for now, there’s a short-term hole in supply. “We have a lot of fund money driving this,” he says. “If we were to continue past the all-time highs, then the sky’s the limit. We have a lot of people on the long side that have to get out of their longs in April,” and it could see prices move towards $98, but speculative liquidation could drive prices as low as $88.

The storms effects will be felt into May, says Richard H. Nelson, director of research at Allendale Inc., but that’s already in the market. For March, he sees prices between $93 and $96 per hundred weight. He expects the U.S. Department of Agriculture to allow more import of Canadian beef and cattle. “That should wrap things up as far as reducing volatility and getting this market into a sideways range,” he says.

About the Author