Market analyst presents cattle news at Wyoming Bankers Association convention
On May 16-17, the Wyoming Bankers Association (WBA) hosted the 2024 Agriculture Bankers Conference in Buffalo where DV Auction Commercial Cattle Manager and Livestock Market Analyst Corbitt Wall closed out the annual convention with a presentation on the history of cattle, beef market sales and fed cattle markets.
Wall, a fourth-generation cattleman, is well-known for his daily market reports and commentary on livestock events on National Beef Wire.
National Beef Wire is an interactive platform for the display of real-time pricing and news relevant to the cattle and agriculture industries and hosts Wall’s program “Feeder Flash.”
Cattle markets
The five-area reporting region includes Texas, Oklahoma and New Mexico; Kansas; Nebraska; Colorado and Iowa and Minnesota.
“Colorado is limited to releasing information based on confidentiality, so we don’t see much information coming from Colorado,” Wall noted. “But, the cash market is higher for fed cattle and boxed beef this week.”
The futures for live cattle were steady across contract months, and cash prices for feeders were lower across weight classes.
Wall explained feeder futures prices were lower and volatility levels for live and feeder cattle futures have decreased in recent weeks.
Boxed beef prices continue to soar, while the Choice spread narrowed just a touch, thanks to a stronger Select cutout.
“Feeder cattle contracts were up sharply, gaining good ground,” Wall said. “Cattle feeders are pricing cattle higher than last week, and the negotiated fed cattle market has traded up week-to-date.”
According to the U.S. Department of Agriculture (USDA) Cattle report, the U.S. cattle inventory will likely decline further in 2024.
“The total number of cattle on feed in U.S. feedlots of all sizes as of Jan. 1 was 14.2 million head, two percent higher than 2023, while the number of cattle outside of feedlots on Jan. 1 was about four percent below a year ago,” the report reads. “The five-area steer price for 2024 is forecast to average a record $180 per hundredweight (cwt), eclipsing 2023’s record $175.54 per cwt.”
Issues
Wall discussed a few issues he feels the cattle market is facing, including the packer monopoly, formula-fixed pricing and lab-grown meat.
According to Wall, “If we don’t get competition back in our cattle markets, the trickle-down effect will go on and on, and we’ll see our agriculture communities dry up and fade away.”
“Negotiation is the best way to sell anything. If you can’t negotiate, how do you ever get a higher price? This is what we are missing in the cattle industry today,” he added. “Increased formula trading has resulted in a continual decline in competition. Setting a minimum requirement for negotiated cash sales will cause significant change and drastically help our cattle markets.”
There are thousands of ranchers, stockers and feedlots, but only a handful of packers, and it’s reported four major packers account for 80 percent or more of industry capacity in each year.
“There are just a few packers playing, and they do almost all of the business,” said Wall. “Mandatory price reporting isn’t as good as what it was and what it should be.”
“And then with the fire at the Tyson plant in Kansas, we found out just how truly vulnerable we really are. Ranchers don’t have any leverage anymore. It’s a sad situation. So much of our industry is relying on the cash fat cattle price, and whenever a catastrophe hits, producers are left dealing with the aftermath,” he continued.
“The meatpackers in the U.S. are controlling producers through formula and forward cattle pricing, and reducing the number of slaughters restricts cash trades and manipulates future contracts,” he added. “This weakens producers’ ability to negotiate fair returns for their products.”
However, USDA addressed this issue, and on March 5 it announced the finalization of Inclusive Competition and Market Integrity Under the Packers and Stockyards (P&S) Act.
According to the USDA, the final rule will be effective 60 days following publication in the Federal Register and establishes clearer, more effective standards under the P&S Act for prohibited practices relating to discrimination, retaliation and deception in contracting.
“The update in the P&S Act will help producers and growers who have suffered from increasingly consolidated markets over the last 30 years by enhancing market integrity and ensuring fair access to economic opportunities,” reads the USDA website.
In Wall’s presentation, he showcased what producers are truly dealing with right now. For instance, the topic of fake meat.
“Beyond Meat’s mission statement is to eliminate farm animals from protein production,” he said. “This newly-created product will show up in schools and prisons first, and Brazil has started investing in sustainable insect-based animal protein.”
He further warned of the dangers of the beef industry going by the wayside, just like dairy and pork production.
Melissa Anderson is the editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.
