Livestock markets were worrisome at the beginning of the week. On Wednesday they plunged even lower, causing unrest to producers and experts alike.
Live cattle contracts for April, June and August all closed $4.50 per hundredweight (cwt) lower and Wednesday’s total dress trade was estimated at 116,000 head — 6,000 less than a week prior. That’s a 5.17 percent drop. Making matters worse, Wednesday’ $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 coronavirus.
“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 haven’t 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 $162-$167 per hundredweight (cwt) for the fourth quarter. As public precautions regarding the novel coronavirus 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.”
Bennett’s a farmer himself and former grain elevator operator. He holds a Series 3 brokerage license and three decades of experience in the agriculture markets. He’s found it difficult to give advice to navigate these markets as he called the current situation “uncharted.”
He’s concerned by cattle prices, especially as he’s seen some markets close at $84-95 per hundredweight.
“It’s been one of the more challenging times in my career and I’ve been doing this my whole life,” Bennett told the Star-Tribune. “Profit margins are just bad. You’re probably going to see some people who just aren’t able to stay in this because of profit margins.”
Those concerns reached Wyoming’s Sens. Mike Enzi and John Barrasso. They, along with Rep. Liz Cheney, were among many to cosign a letter to U.S. Department of Agriculture Secretary Sonny Perdue on Wednesday to request the swift assistance of the Coronavirus Aid, Relief and Economic Stabilization (CARES) Act.
“Recognizing the market volatility and financial hardships producers are facing because of COVID-19,” the letter stated, “the CARES Act provides $14 billion toward the replenishment of the Commodity Credit Corporation and an additional $9.5 billion for the U.S. Department of Agriculture to assist farmers and ranchers in response to COVID-19.”
Bennett, an AgMarket expert, said he’s hoping to see energy markets recover first, then a relaxation or outright elimination of travel restrictions. Getting people to return to their routines is vital in the market’s recovery, he explained. Mass purchasing of meat has dwindled since the initial rush as people first panicked about coronavirus.
Private domestic beef sales have stalled. So experts have eagerly looked towards the full reopening of restaurants across America. The restaurant industry purchases more meat than the general public. Their recovery could intertwine with that of farmers and ranchers.
“The more infrastructure that can stay in place during this social distancing period,” Feuz said, “the faster we can recover.”
Follow sports reporter Brady Oltmans on Twitter @BradyOltmans
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