Market Talk (Jesse Allen)

Will Cattle Market Volatility Continue in June?

The program examined June’s cattle‑market outlook, focusing on the lingering volatility that defined May. Assistant professor Charlie Martinez explained that drought in the Southeast and limited wheat pasture in Kansas have left overall cattle supplies unusually low, while placement figures jumped about 6% year‑over‑year as producers moved animals off pasture into feedlots. Key data points highlighted a 10% year‑over‑year drop in total slaughter and a rise in placement numbers, underscoring a tight‑supply environment. Retail beef prices remain elevated, further strained by higher gasoline costs that curb disposable income. Meanwhile, the choice‑select price spread has begun to turn negative, suggesting consumers are gravitating toward cheaper select cuts. Martinez cited specific examples: the unexpected 6% placement increase, the shift in wholesale spreads, and the emergence of New World screwworm reports just 31 miles south of the Texas‑Mexico border, which injected bearish sentiment into futures markets. He also stressed the importance of price‑risk tools such as LRP and careful cost‑of‑production analysis for producers navigating this uncertainty. The broader implication is that tight supplies will likely keep beef prices high through the summer, but demand could erode if consumers continue substituting pork, chicken, or lower‑priced beef. Producers must prioritize risk‑management strategies and monitor weather and disease developments to protect margins in a volatile market.