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If enacted , the bill would direct the U . S . Department of Agriculture ( USDA ) to create a cattle formula contracts library , and increase the reporting window for “ cattle committed ” from seven to 14 days . These measures aim at increasing transparency in the industry and improve the opportunity for robust price discovery .
Rep . Hartzler ’ s legislation also reiterates the need for expedited reauthorization of USDA ’ s LMR program .
The bill would also require the USDA , in consultation with the Chief Economist , to establish mandated minimums for regional negotiated cash and negotiated grid live cattle trade . Minimums would be set within two years of passage of the bill , and would invite stakeholder input through a public comment period and the consideration of key , peer-reviewed research from land grant universities .
The same week , Representative Mike Guest ( R-MS ) and Representative Darren Soto ( D-FL ) led a bipartisan group of 52 lawmakers in pushing the DOJ to complete its investigation into the meatpacking sector , and whether or not anticompetitive practices have contributed to a persistent imbalance in the cattle markets .
“ The growing momentum we ’ re seeing in the House and Senate behind addressing these critical concerns in the cattle markets is reflective of the urgency producers are feeling across the country ,” said Ethan Lane , NCBA Vice President of Government Affairs . “ Extreme market volatility , unpredictable input costs , a shifting regulatory landscape and natural crises like drought leave cattle farmers and ranchers with a growing list of threats to their continued financial viability . Something needs to give .”
ABOUT THE AUTHOR : Wes Ishmael has been involved with livestock publications since 1983 . Wes grew up in Colorado and has always been in and around the livestock business . He now lives in Benbrook , Texas .
Most market analysts see cattle price relief on the horizon , but it seems akin to riding toward mountains in the distance , which appear closer than reality .
“ Packers appear unable to increase weekday slaughter levels to process the market-ready supply in a timely manner as the sector enters a period of typically higher fed cattle slaughter ,” explained analysts with USDA ’ s Economic Research Service ( ERS ), in May ’ s Livestock , Dairy and Poultry Outlook . “ This appears to be in part due to labor disruptions that packers have dealt with since the beginning of the pandemic , but also interruptions in slaughter due to extreme weather in February and scheduled plant maintenance events .”
In other words , the industry continued to be saddled with too much fed cattle supply for available beef packing capacity , meaning all of the market leverage remained with beef packers .
“ Feedlots are constrained in their ability to market cattle in a timely manner . As producers face poor pasture conditions and rising feed costs , they will compete for space in feedlots in an environment with higher expected feed prices and little optimism for fed cattle prices ,” ERS analysts explained .
“ With decreased forages available , feeder cattle may need to enter feedlots earlier , depressing feeder cattle prices and possibly having a seasonal low ( price ) mid-summer as opposed to early fall ,” said Brenda Boetel , Extension livestock economist at the University of Wisconsin-River Falls , in a May issue of In the Cattle Markets . “ With continued labor shortages and high levels of cattle on feed , there is limited bullish news for fat cattle prices . Corn prices will remain volatile and will move with any weather news .”
Of course , the same drought conditions appeared to be accelerating the nascent cyclical herd liquidation indicated at the beginning of the year .
Through the first week of June , analysts with the Livestock Marketing Information Center ( LMIC ) estimated total federally
Muddy To Clearing
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inspected U . S . beef cow slaughter 10.1 % higher than the same time a year earlier . They noted that below-average slaughter levels last year amplified the percentage change .
Eventually , declining cattle numbers will translate into stronger cattle prices , likely as soon as the end of the third quarter of this year . Cattle futures prices suggest as much .
“ LMIC projected break-evens ( feedlot ) currently list October at about $ 115 / cwt ., nearly $ 10 under the current October Live Cattle Contract . More distant deferred Live Cattle contracts are even higher , which should bode well for cattle feeding returns into the first half of 2022 ,” said LMIC analysts , in that organization ’ s May Livestock Monitor .
Up to that time , LMIC estimated cattle feeding returns at - $ 60 to +$ 40 per head for the year , due in part to escalating feed costs on the negative side of the ledger , but supported by declining feeder cattle prices from August of last year through January this year .
In the June World Agricultural Supply and Demand Estimate , ERS forecast the five-area direct fed steer price at $ 117 / cwt . for this year . Projected average prices were $ 120 in the second quarter , $ 115 in the third quarter and $ 120 in the fourth quarter .
“ Calmer times may be coming but we are not quite there yet ,” explained Derrell Peel , Extension livestock marketing specialist at Oklahoma State University , in early-June market comments . “ Feed prices are expected to remain elevated and feeder cattle markets will continue to adjust to both feed market and fed cattle market conditions . Drought impacts remain uncertain and the short-term and long-term impacts on cattle markets are unknown . If enough herd liquidation is forced by the drought , short-term cattle slaughter and beef production will be higher than expected and beef production prospects beyond 2021 will be reduced .”