Although the CME cheese markets have weakened as of late, that has not been the case with butter....
Drought is expected to persist for a large part of cattle country. We and our mothers know that the U.S. cattle and cow inventories declined in 2022 and are historically low which is partly behind the USDA's forecast for a 6 (think: Bill Russell) percent plus decline in beef output this year. Another big factor is cattle and cow weights are tracking below year ago levels.
Lower cattle and cow weights accompanied with declining herds can be especially concerning for fat and lean beef trim buyers. When we had a sharp reduction in cattle weights coinciding with smaller herds in 2014, the beef 50 and beef 90 markets annual averages rose 29.5 percent and 31.5 percent respectively. In other words, the risk in the beef trim markets (think: ingredients for hamburger) is almost certainly to the upside from here. And there's likely even more upside risk in 2024.
Datum FS now has forecasts for over 50 commodities comprising various beef, dairy, grains, pork and chicken markets. If you would like to learn more about a complimentary trial to the forecasts and commentary email me at david@datumfs.com. Thanks for reading.
