In this weekly Commodities Watch column, John T. Barone, president and commodities analyst for Market Vision Inc., offers a snapshot of the state of commodities for restaurants.
Friday’s USDA cattle report showed feedlot inventories at 11.07 million head, a decrease of 6.2 percent from a year ago. Feedlot numbers are likely to continue falling as smaller feeder-cattle supplies foretell declining placements through spring.
Separately, in its annual livestock forecast, the USDA said beef output would decline 3 percent to 25.1 billion pounds this year. The USDA also projects that a small calf crop will lead to tighter cattle supplies for 2014 and that it is unlikely that calf supplies could support an increase in beef production before 2016.
Cattle slaughter for the first half of 2013 will be very near 2012 levels, but slaughter will decline sharply in the second half of the year as feedlot inventories decline.
Cattle futures are currently trading at $126.35/cwt. However, forward cattle contracts — with April 2013 at $128.22 and April 2014 at $133.10, reflect expectations for higher prices.
Contact John T. Barone at [email protected].