Cattle futures tread water for most of Tuesday’s session and then closed decidedly lower in late trade. Along with the consolidated price range, perhaps late selling included some positioning ahead of Friday’s monthly Cattle on Feed report.
Live Cattle futures closed 91¢ lower (55¢ to $1.37 lower).
Feeder Cattle futures closed an average of $1.82 lower ($1.42 to $2.15 lower).
Choice boxed beef cutout value was $1.15 lower Tuesday afternoon at $197.66/cwt. Select was 72¢ lower at $189.85.
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Major U.S. financial indices closed narrowly mixed on Tuesday with support from continued strength in quarterly earnings.
The Dow Jones Industrial Average closed 40 points higher. The S&P 500 closed 1 point higher. The NASDAQ closed fractionally lower.
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USDA withdrew its controversial Grain Inspection, Packers and Stockyard Administration (GIPSA) interim final rule (IFR) yesterday, a victory for those who favor a free market and competition.
You’ll recall that the rule (also known as the Farmer Fair Practices Rules) would have eliminated the need for someone to prove competitive injury in order to win a GIPSA lawsuit. Intended or not, the rules would have unhinged the alternative marketing arrangements that enable producers to receive more than an average price for more than added value. In other words, rather than risk litigation, beef packers would have effectively been forced by law to pay the same money for all cattle, regardless of value.
“Collectively, the rules would have made it unnecessary for plaintiffs to show general harm to competition when challenging a packer’s decision to offer premiums to producers through established marketing agreements, going well beyond the statutory language, potentially opening the gates to lawsuits from disgruntled producers, and ultimately limiting marketing options and consumer choice,” according to a statement from the House Committee on Agriculture.
“The IFR attempted to renew a proposal rejected by Congress through four funding bills and directly circumvented the rulings of eight separate federal appeals courts,” according to a statement from the North American Meat Institute. “The IFR would have greatly limited marketing agreements that allow the industry to meet consumer demand for various animal handling and production requirements, such as organic, grass fed, raised without an antibiotics and others, limiting the availability of these products for consumers.”
House Agriculture Committee Chairman K. Michael Conaway said after yesterday’s announcement, “Today’s decision helps restore both Congressional intent and common sense by ensuring American producers have the freedom to market their products without the threat of frivolous lawsuits.”
Colin Woodall, the National Cattlemen’s Beef Association’s Senior Vice President, Government Affairs, summed up withdrawal of the IFR this way: This is a victory for America’s cattle and beef producers – and it’s a victory for America’s consumers…The proposed rule would have crippled cattle producers’ ability to market their products through the value-added programs that help make American-produced beef the most delicious and nutritious in the world. This is a decision worthy of celebrating with a top-quality steak.”