April 7, 2020

 

US cattle contracts drop over 5%

 

 

Live cattle contracts for April, June and August all closed US$4.50 per hundredweight (cwt) lower, a 5.17% drop and Wednesday's total dress trade was estimated at 116,000 heads—6,000 less than a week prior.

 

Making matters worse, Wednesday' US$7.98 per hundredweight fall in beef choice was the biggest loss in one day. That's thrown an already volatile time into a state of unrest.

 

Bridger Feuz, a livestock marketing specialist working at the University of Wyoming's Extension Office in Evanston, explained that much of those market fluctuations have happened due to the COVID-19.

 

"Slaughter steer prices had been trending down since the first of February," Feuz told the Star-Tribune in an email. "Much of this downward trend was due to the uncertainty surrounding the COVID-19 outbreak."

 

Those fluctuations have not necessarily been uncharacteristic, but every livestock market moving downward together has brought concern. Feuz said that it was too early to affirm local producers' accusation of price gouging against meat packers while noting discrepancies between wholesale beef prices and slaughter steer prices.

 

"In a few weeks we will be able to see the top of the wholesale beef prices and shortly thereafter we are likely to see the top of the slaughter steer prices," Feuz said. "Once that scenario plays out we will have more data to determine if there were any pricing improprieties."

 

Some operations, however, do not have time to wait for the scenario to play out. Wyoming producers have entered the calving season for sale on their calves/yearlings in the fall. Feuz stated he wouldn't be surprised to see a volatile cattle market for the rest of the year as the Livestock Marketing Information Center projects 500-600-pound steer calf prices at US$162-$167 per hundredweight (cwt) for the fourth quarter. As public precautions regarding the novel COVID-19 extend further into the spring, farmers and ranchers drift closer towards financial doomsday.

 

"The way this is going, there's no doubt it's bankrupting people," commodities analyst Matt Bennett said. "You can't function normally."