A rally in cattle and beef prices might be coming soon if the summer heat wave holds on.
Rumors of beef demand slipping have caused speculation the market could drop, but Ted Seifried, vice president for Ag Hedge Group, believes cattle markets are going to be in a holding period, possibly even increasing.
"There's been a lot of talk about prices going down and we've had a couple days this week where we had seen some pressure on prices. However, we've done very well on coming back," Seifried says.
Some economists have said a falloff in beef demand could be coming, but Seifried doesn't see that happening with the current supply situation.
"We've been talking a lot about weather for grain markets. We've been talking about this heat and whether it's going to be dry or not. Well, for cattle it doesn't matter if it is dry or not. It matters about the heat," Seifried relates.
Going forward as summer hot spells continue it will be difficult to add and keep weight on feedlot cattle. This would drag down finished feeder weights and bring down supply in the short-term.
"Even if we did have a little bit of a drop in demand these the smaller supply could push prices higher again," Seifried says.
He adds drops in cattle weights will be seen much sooner than the price impact of increased placements.