Beef Prices Hit Seasonal Low in June
Beef prices tend to form a seasonal high in March as packers have purchased inventory ahead of the summer grilling season.
Then as grill masters supplement steaks and burgers with pork ribs, chicken and other delicacies, beef consumption starts to decline in the hot weather. But beef supplies also begin to dwindle as feed lots are short on inventory.
Live Cattle prices typically hit a seasonal low in mid- to late June and then begin to rise before the school season begins as federal government subsidies for school lunch programs kick in for beef purchases. Consumption continues to increase through the winter and holiday season, generally keeping cattle futures prices higher through mid-February.
Our top longer-term seasonal play for live cattle is to go long the April 2017 contract near the usual June low on or about June 20 and hold it for 160 days until early. Over the past 46 years this trade has been positive 30 times for a success rate of 65.2%. Prior to the last two year, the previous four years were stellar. 2010 registered the largest gain in this trade’s 46-year history and those four years combined account for more than half the historic gains. Last year, this trade did not work as prices were retreating from multi-year highs.
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