Beef pricing questions
For the past year prices of beef have gone up in stores and at packing plants – but not at the farmer level. This week the Senate Agriculture Committee met in a hearing to examine markets, transparency and prices from cattle producer to consumer. The two-hour meeting included university researchers, cattle producers and market analysts to talk about the reasons this may be.
Iowa Senator Chuck Grassley is on the committee and says farmers are mad about profits that packers are making, while they get low prices and wait long periods to market their product. He made this comment over an hour into the hearing: “I have not heard anybody justify this situation, I just described where farmers don’t make a profit, the family farmer, and the packers make a $1,200 dollar profit, and there’s no benefit to the consumer.”
Iowa leads the nation in cash cattle trade. Vice President of the Cattlemen’s Association, Justin Tupper, was one of the witnesses at the hearing. He claims packers have a captive supply. Grassley asked if that lets packers leverage lower prices for fed cattle. Tupper says while alternative marketing and agreements with packers offer some advantages to producers, it also affect price transparency and competition.
“How do we know what cattle are worth in regions that don’t have price discovery? Are small independent producers offered the same opportunities to market their cattle as big producers due to formula contracts?,” Tupper asked, “And I would say ‘definitely not’. We know and we need a contract library that tells us this. They definitely, some of the corporate feedlots, are getting a different deal than the small farmer feeder is. We can’t get those same deals – they’re being offered those. And I agree, some of the best cattle in the country are raised in (Iowa). (They) come from our state in South Dakota and are fed in Iowa, and they do with the cash trade, and they are shouldering the burden for everyone else.”
A look at the markets
Market analyst Jamey Kohake has the start of the week markets:
“Starting off in the row crops we have a nice trade going, despite some in the cattle, corn a bit of a correction, we saw option expiration Friday a bloodbath as well weather concern with storms across the central plains. But it’s all weather the next two days, and the report Wednesday morning. Of course we have the long weekend. No trade on Monday and probably lots of fireworks like we’ve seen here lately. We saw cattle on feed on Friday, pretty much neutral. Kind of getting toppy again, I think cash is topped out, get through this long weekend. Over to hogs finally getting upside trade, been a blood bath on fears of cut outs and cash crashing and I think we’ve put in a low to hold through the report see how that plays out. But I think hogs are due for a dead cat bounce and see if that plays out this week.
The Colfax sheep and goat auction on Saturday saw a sale of 610 head of sheep. Feeder lambs fetched the day’s high average price of $2.68 per pound, while fed lambs averaged $2.64 per pound. There were 183 head of goats at the auction which saw a high average price ranging from $127.50 to $610 per head.