Markets
Texas congressman Mike Conaway told AgriTalk radio he believes an investigation into packer profits is likely, but encourages cattlemen and processors to continue working to feed Americans during the COVID-19 crisis.
Cash prices charged higher in feedyard country this week, leaving CME futures in the dust. Feeder cattle recovered most of the previous week’s losses.
The current cattle market situation creates significant disparities between the current supply and demand situation and expectations for coming supply and demand conditions.
Some American beef packing companies are adding to worker’s hourly pay and sick leave in response to the COVID-19 emergency. Some will earn an additional bonus for working all their shifts through May 3.
Panic meat buying emptied shelves and drove the Choice beef cutouts nearly $48 per cwt. higher. Cash fed cattle were higher, but not at a proportionate level.
Packer margin is significant. However, why is packer profitability the only focus, and we are not as outraged about the other “elephant in the room” issue within our market?
The U.S. and global economy is in uncharted waters. There are many unknowns about the timing, severity and aftermath of the disease. For beef, there are longer-term questions about the overall impact on demand.
Cattle markets will continue to be influenced by uncertainties from coronavirus, and the sharp selloff in financial markets. The DOW closed the week with a 1,985-point gain (9.4%), the DOW’s largest ever one-day gain.
The world’s largest potential market for beef seems to be shrinking under the strain of the cornonavirus as the government locked down cities for weeks and enforced wide-scale quarantines.
Progressive Beef™, a cattle management and sustainability system for feedlots, says more than two million cattle have been certified through the program and nearly four million cattle will be certified this year.
Cash fed cattle prices traded lower as futures prices set new lows for the week before a Friday rebound.
While cash fed cattle traded lower the past two weeks, traders anticipate a higher market toward spring as cattle numbers tighten seasonally and beef demand improves.
There was some hesitation among buyers this week as the CME futures had a downward turn and sell-off early in the trading period. Steers and heifers sold lower at auctions.
Agricultural Marketing Service reporters said the market was most active on “lightweight cattle, in light flesh, as numbers of those cattle are not as plentiful as their heavier mates.”
Cattle feeders were unable to push the cash market higher, settling for mostly steady money as packers were noticeably less aggressive with much narrower profit margins.
A pair of lawsuits filed last year involving a packing company and two producers have been dismissed following a confidential settlement.
Lawyers for America’s largest beef packing companies asked a federal judge on Friday to dismiss the class action suit filed against them by a group of ranchers last year.
Walmart held a grand opening of its Thomasville, Georgia, beef processing facility that will supply Black Angus beef to some 500 of its retail stores in the southeast.
Steers and heifers suitable for grazing programs sold sharply higher in the week ended Jan. 10. AMS reporters called demand good to very good at livestock auctions nationwide.
John Nalivka’s projections for the 2020 Cattle Inventory show a decline of 1.6%, which, if realized, would be smallest inventory number since 2016.
Over the past 10 weeks, cattle feeders have gained market leverage in a rally the likes of which have not been seen in many years.
The new year brings with it several changes in ongoing market dynamics, some new opportunities, and some new risks and continuing challenges for cattle and beef markets.
Packers were aggressive in obtaining inventory to start the new year, and the result was a cash cattle market that gained $2 in both the north and south.
As consumers glean more information about where their food comes from, producers need to focus on how they manage their farm or ranch. Beef Quality Assurance certification is a good place to start.
Cash cattle prices traded higher in the north, with dressed sales reported $3 to $5 higher. Feeder cattle markets saw a limited holiday-week test.
Packers were eager to push their inventory higher last week and prices in all regions responded by moving $1 to $2 higher.
Cash cattle prices traded $1 to $2 ahead of Friday’s USDA Cattle on Feed report which reported a 2.5% increase in the number of cattle in feedlots.
Steers and heifers sold at auctions this week steady to $3 lower. AMS said with the holidays and the end of the year fast approaching, many auction markets saw heavy runs of cattle.
Sharply higher carcass weights have boosted beef production, though another round of winter weather hitting parts of cattle feeding country may temper that in the last few weeks of the year.
In anticipation of reduced harvest during the holidays, packers are sitting in a good inventory position going into the next few weeks.