In this weekly Commodities Watch column, John T. Barone, president and commodities analyst for Market Vision Inc., offers a snapshot of the state of commodities for restaurants.
Friday’s USDA cattle report showed feedlot inventories at 11.25 million head, declining 5 percent from a year ago. New feedlot placements in October were 2.2 million head, 13 percent less than a year ago and the lowest October placement number on record.
The combination of record high prices for both feeder cattle and feed has decimated margins for feedlot operators. But a bigger concern may be the declining availability of feeders, as off-feedlot cattle numbers have dropped to record low levels. The USDA bumped its 2013 cattle price forecast to $128/cwt, 4.8 percent above a year ago. Cattle futures, at $126.15, have been edging higher, and forward contracts for 2013 are averaging $132, well above USDA projections.
Beef markets are playing out as expected, with record high prices still coming in spring 2013. Consumer resistance at the retail level may be providing the only hindrance to even higher prices.
Contact John T. Barone at [email protected].
