As cattle numbers continue to drop, one might think cattle prices would keep rising, but they are not. I’ve been hearing words such as “volatile,” “uneasy” and “uncertain” in some market reports.
For cattle producers, prices will still be strong, but feeder cattle could drop a little.
There are a couple of reasons for this drop in the last few weeks and it’s mostly because packinghouses had to do something to stop huge losses, so they lowered their processing capacity, either by closing some of their packinghouses or by dropping work shifts at other packinghouses.
They are still losing on every fat cow they process, but not as bad as last year.
Another challenge is union workers at the JBS Packinghouse in Greeley, Colo. have announced they intend to strike on March 16. This is a huge packinghouse, so a strike would affect a large number of people and cattle and could raise the price of beef in the region.
According to CattleFax, “Leverage between the cattle feeder and the packer continues to shift dramatically, with the cutout gaining $20 per hundredweight over the past two weeks, while cash for fed cattle retreated abruptly from recent highs in the mid-$200,000 range. While fed cattle supplies remain manageable, historically negative packer margins led to harvest reductions which have constrained demand for fed cattle in the near term.”
“Fed slaughter has dropped between 410,000 and 420,000 head per week over the past three weeks, which are some of the smallest non-holiday totals on record,” CattleFax continues. “Estimated packer margins have rebounded considerably, although they still remain in the red.”
At 420,000 head, fat cattle processed every week is really down. A year ago last week, packers were processing close to 570,000 head of fat cattle, and the year before that, the number was around 650,000 head of fat cattle processed per week.
With strong beef demand these days – especially for hamburger – one can see why packers are importing beef.
Another issue affecting meatpackers and producers are the ramped-up campaigns from animal welfare groups.
The American Society for the Prevention of Cruelty to Animals, People for the Ethical Treatment of Animals and Humane World for Animals are all raising hundreds of millions of dollars annually to stop meat production across the board.
Their main goals are to lobby for taxpayer-funded programs to encourage livestock operations to transition into plant-based production to develop shareholder activism and coordinated campaigns pushing cage-free commitments and other production standards affecting poultry and egg producers.
They also want food retailers to scale back lower-cost animal protein options in favor of higher-cost alternatives.
As you can see, they are working all angles to reach their goals, so animal production agriculture needs to be aware of their actions and do everything they can to combat them.
With cattle numbers so low, producers need to be aware of all the people and businesses who depend on them. From local auctions to big video sales, it takes a certain number of cattle for them to stay in business.
Along with livestock truckers and other supporting businesses, such as commodity traders, the cattle business is a far-reaching industry which cattle producers all depend on. The cattle business is more than just producers.
Dennis Sun is the publisher of the Wyoming Livestock Roundup, a weekly agriculture newspaper available online and in print. For more information, visit www.wylr.net.
