United States-Rally in beef prices.

UNITED STATES-BEEF PRICES FIRM.

The rally that wholesale beef prices has enjoyed

could be nearing a seasonal peak, market analysts said Monday.

Whether that happens depends on consumer demand as the grilling season heats

up, the analysts and economists said. Since mid-March grocers have stepped up

their after-Easter beef bookings, hoping for a seasonal pick-up in retail

buying as spring weather advances.

The U.S. Department of Agriculture listed its choice boxed beef cutout value

Friday at $149.20 per hundredweight, up $16.07 from the recent low of $133.13

on March 19. Most of this rise came in the last three weeks, according to USDA

figures.

Over the last few years, the average seasonal peak came in mid-May, but it

has occurred as early as the last week of April, said Jim Robb, agricultural

economist for the Livestock Marketing Information Center .

This year, beef demand and movement have been a little more dicey. The

recession and chilly weather conditions have encouraged consumers to restrain

their beef-buying habits. Retail and food service buyers have kept their

inventories at bare-bones levels, fearing they would be left with unsalable

stocks.

That left pipeline supplies thin, market analysts said, so that when buyers

came back to book for May, cutout values were pushed higher without a

significant boost in consumer buying. For prices to stay high, consumers need

to step up to the plate.

"The key issue is how well we can move retail," said Ron Plain , agricultural

economist at the University of Missouri . First-quarter exports were up, so this

side of the market "is holding up pretty well," he said.

If beef sales rise then prices may hold, Plain said. Mild weather, which is

forecast for the near-term, could be important to keep movement going, he said.

Robb said when beef prices top out in May, they tend to be about $2 higher

than in mid-April. So adding $2 to Friday’s choice cutout value could mean a

top of about $151.20, he said.

"But clearly we’re in a hand-to-mouth (buying) pattern," Robb said. "So we

could see some volatility" that takes prices up or down sharply from current

levels.

Troy Vetterkind, director of livestock analysis and trading at Vetterkind

Cattle Brokerage, said in his daily market commentary that beef demand "should

continue to be supportive to higher beef prices in the next couple of weeks as

the weather warms throughout much of the country and short-bought buyers

re-enter the market to secure needs."

"I would continue to look for a higher trend to the boxed beef market by the

end of the week" with choice cutout value trading up around $152 to $153 by

Friday, Vetterkind said. The top may come in the next three weeks "around the

$155 area," he said.

Rich Nelson, livestock market analyst at Allendale Inc., is pessimistic,

saying the gains in wholesale beef prices may be about done.

The economy hasn’t really recovered as much as many economists and traders

expected, Nelson said. The latest move higher by the Dow Jones Industrial

Average was done on ideas the worst of the recession is over, but traders now

are seeing that even is this is so, it may take longer to filter into consumer

beef buying habits.

Vetterkind said declining carcass weights and seasonal challenges to the

grades as more calf-fed cattle come to slaughter could support the beef cutout

values into May.

Nelson, however, said the number of those calf-fed cattle that are scheduled

for slaughter over the next few months may overwhelm the delicate balance in

beef markets.

"I would say the futures are correct in saying ’it’s been a nice bounce, but

it’s done,’" Nelson said.