Cattle Call is an original production of the Nebraska Rural Radio Association and presented by Blue Chip Herefords – Oxford, Nebraska.
A rare market signal has appeared in the cattle sector that could signal a shift in consumer demand just as the grilling season ramps up.
Brad Kooima of KKV Trading says the inversion of the choice-select boxed beef spread suggests demand may be shifting away from premium beef, as consumers show more resistance to higher-priced cuts and opt for more affordable options.
“Normally this would be the time of year when choice and select would be a little closer together, not inverted. Not even close. We’re really inverted,” Kooima said. “So demand better be picking up here in the next two, three weeks, otherwise you’re going to have another backing away from the background.”
Kooima attributes the unusual spread in part to historically high cattle weights and prolonged feeding periods that have pushed more cattle into the choice grade than ever before.
“The number one factor…is more of the supply. We are producing more choice than we’ve ever done at any time. The grade is the highest it’s ever been. The choice and prime is the highest percentage ever,” he said.
For ranchers, Kooima said the inversion could be a warning sign to watch marketing timing closely. With high-grade beef plentiful and consumer demand uncertain, missteps could pressure cash prices even as the futures market stays strong.
“Maybe we should just take a little more of a reserved attempt here…maybe do our marketing just a little more timely,” Kooima said.
Kooima also noted that while U.S.-Mexico trade and plant capacity in Mexico remain important factors, domestic fundamentals, particularly supply and beef quality, are increasingly driving the market.
“I hope the majority of this is just high-quality supply. But we’ve got to be very sensitive to demand,” he said.
Other Topics Discussed:
- Greeley plant resuming operations and impact on cattle procurement
- Border reopening and trade with Mexico amid screwworm restrictions
- Effects of heavier cattle and longer feeding periods on margins
- Price dynamics for feedlots and packers in current bull market
- Seasonal timing for Memorial Day and summer grilling demand
