From CattleFax
Year-to-date beef demand is up 5% compared to 2011. The retail price of beef has averaged $0.27/lb., six percent higher than a year ago, while peer capita net beef supplies are larger than a year ago. Looking ahead what is the outlook for fourth quarter beef demand?
Per capita net beef supplies are forecast to be up 1 percent versus 2011 for the fourth quarter. Therefore, if demand is to be even with a year ago, prices should be lower than last year in the fourth quarter just based on the bigger supply. However,when we look at the current live cattle futures, the October contract is trading nearer $128 and December above $130. It appears the futures market is expecting the trend of higher demand to continue knowing that the fed price averaged $6-8/cwt. below those levels in the fourth quarter of last year. Given the current futures prices and our supply forecast, the futures market is pricing in demand to be up 6 percent versus 2011 in the fourth quarter.