Demand for beef improved during the second half of April as the summer barbecue season approached. Seasonally stronger demand coupled with continued tight beef supplies provided renewed support to both the cutout and finished cattle prices. But the length and breadth of this price rally will still hinge on demand.

Consumers may be tired of the recession and “pent-up demand” will be the driver this summer. As feedlot breakeven prices hover in the low $80s per hundredweight this spring, feeding margins will turn positive, and packer margins will also improve significantly through June. Grain prices have moved higher and could see further gains in the coming weeks. The steer-corn ratio improved during April, mainly due to increases in fed-cattle prices. Demand will continue as the key price factor as fed-cattle supplies will increase during June and July.