There was a little hope the last couple of weeks for the market bears. Wholesale beef prices had stagnated and there was talk that beef demand wasn’t showing the usual seasonal vigor. So, after a couple of weeks of softness, the market bears were starting to awaken; some even had the confidence to proclaim that the end was upon us.
But then things seemed to change, as housing starts picked up amid a surprising jump in home sales and building. An increase in wholesale buying also surprised analysts, making their initial claim that the economy was going into recession less likely compared to continued but extremely weak growth.
What’s more, the warm-up in weather has allowed grills to get fired up across the country, while favorable crop planting conditions has caused the corn market to weaken despite tight supplies on old crop corn. Throw in the tragic estimates that as many as 7 million baby pigs have succumbed to the Porcine Epidemic Diarrhea virus (PEDv) that is ravaging the pork industry, and things look pretty good for the beef industry.
In spite of recent rains in some areas, if you live in the Texas Panhandle, or in the drought-parched parts of Kansas, Colorado, Oklahoma or California, your thoughts are still pretty well consumed by the need for moisture, of course. However, the latest Drought Monitor indicates that the picture for most of the rest of the country looks pretty good. In fact, long-term projections are more favorable than they have been in years past.
The really tangible fact that the bears seem to be clinging to at this point in time is that there will naturally be a limit to how high this market can go. After all, what goes up eventually must come down. I have to admit that it’s hard to argue with that axiom, especially when one considers how long and hard of a run it has been for the market bears.
The opinions of Troy Marshall are not necessarily those of beefmagazine.com or the Penton Farm Progress Group.
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