Negotiated cash fed cattle trade was at a standstill in the Texas Panhandle though Friday afternoon, according to the Agricultural Marketing Service. Elsewhere, trade was limited on light demand.
For the week, live prices were generally steady to $2 lower in the Southern Plains at $119-$120/cwt. and steady to either side of steady at $123-$126 in the north. Dressed trade was steady in the western Corn Belt at $196-$202 but steady to $4 higher in Nebraska at $198-$202.
The five-area direct average steer price through Thursday was $122.01/cwt. on a live basis, which was $1.81 less than the same period a week earlier. The average steer price in the beef was 34¢ higher at $198.48.
Feeder Cattle futures faded pressure through much of the session to close higher Friday, perhaps supported by some positioning ahead of Monday’s monthly World Agricultural Supply and Demand Estimates.
Feeder Cattle futures closed an average of $1.68 higher ($1.30 to $2.12 higher).
Live Cattle futures managed to edge higher but remained under pressure from declining wholesale beef values. Monday’s markets could come under pressure from the Executive order signed by President Biden Friday, aimed at a number of broad issues, including concentration and competition in several industries, including agriculture (see below).
Live Cattle futures closed an average of 51¢ higher, except for 5¢ lower in spot Aug.
Choice boxed beef cutout value was $3.38 lower Friday afternoon at $278.59/cwt. Select was $2.65 lower at $257.41
Corn futures closed 6¢ to 8¢ lower through new-crop contracts, and then fractionally higher to 3¢ lower.
Soybean futures closed mostly 10¢ to 14¢ higher.
Major U.S. financial indices closed higher Friday amid general economic optimism.
The Dow Jones Industrial Average closed 448 points higher. The S&P 500 closed 48 points higher. The NASDAQ up up 142 points.
“The COVID-19 pandemic led to massive disruption for growers, food workers, and consumers alike. It exposed a food system that was rigid, consolidated, and fragile. Meanwhile, those growing, processing and preparing our food are earning less each year in a system that rewards size over all else,” said Agriculture Secretary Tom Vilsack. “To shift the balance of power back to the people, USDA will invest in building more, better, and fairer markets for producers and consumers alike. The investments USDA will make in expanding meat and poultry capacity, along with restoration of the Packers and Stockyards Act, will begin to level the playing field for farmers and ranchers. This is a once in a generation opportunity to transform the food system so it is more resilient to shocks, delivers greater value to growers and workers, and offers consumers an affordable selection of healthy food produced and sourced locally and regionally by farmers and processors from diverse backgrounds. I am confident USDA’s investments in expanded capacity will spur millions more in leveraged funding from the private sector and state and local partners as our efforts gain traction across the country.”
Specifically, USDA intends to invest $500 million in American Rescue Plan funds to expand meat and poultry processing capacity, “…so that farmers, ranchers, and consumers have more choices in the marketplace.” USDA also announced more than $150 million for existing small and very small processing facilities.
“Concentration in food processing has contributed to bottlenecks in America’s food supply chain, too. Just a few meatpackers, with a few large processing facilities, process most of the livestock that farmers and ranchers raise into the meat that we buy,” according to the announcement. “For example, just four large meat-packing companies control over 80% of the beef market alone. One of the lessons from the COVID-19 pandemic is that this system is too rigid and too fragile. When COVID slowed or shuttered meat processing, many farmers had no place to go. Farmers were forced to depopulate their animals, while grocery store shelves went bare and demand for food assistance spiked. These vulnerabilities are not new. And, given current concerns about climate and cybersecurity, these risks are likely to grow even more sharply in the future.”
For the record, I’m unaware of any cattle depopulation due to the processing backlog, never mind other hyperbole in the USDA statements.
“…To facilitate effective enforcement of the Act (Packer and Stockyards), USDA will be conducting three rulemakings,” according to the announcement. “First, the rulemakings will clarify the conduct that USDA considers a violation of the Packers and Stockyards Act, including conduct that is unfair, deceptive, or unjustly discriminatory against farmers and growers. Second, they will address oppressive practices in chicken processing. Third, the rulemakings will reinforce the longstanding USDA position that it is not necessary to demonstrate harm or likely harm to competition in order to establish a violation of the Act.”
Lots to ponder in all of that, and to monitor closely.