Negotiated cash fed cattle trade was slow on light to moderate demand in the Southern Plains through Wednesday afternoon, according to the Agricultural Marketing Service. Live prices were generally steady at $124/cwt. in the Texas Panhandle and $123-$124 in Kansas.
Prices were unevenly steady in Nebraska at $125 on a live basis and $200 in the beef.
There were too few transactions to trend in the western Corn Belt.
Choice boxed beef cutout value was $3.07 lower Wednesday afternoon at $319.82/cwt. Select was $6.73 lower at $283.89.
Cattle futures retreated Wednesday but held on to most of the previous session’s gains. Resurgent Corn futures added pressure to Feeder Cattle.
Feeder Cattle futures closed an average of $1.20 lower (2¢ at the back to to $2.15 lower toward the front).
Live Cattle futures closed an average of 59¢ lower (10¢ lower at the front to $1.10 lower at the back), except for 5¢ higher in spot Oct.
Corn futures closed 11¢ to 13¢ higher through new-crop contracts and then mostly 3¢ to 6¢ higher.
Soybean futures closed 8¢ to 12¢ higher through Nov ‘22 and then mostly 4¢ to 6¢ higher.
Major U.S. financial indices rose Wednesday, supported by tech and energy stocks.
The Dow Jones Industrial Average closed 236 points higher. The S&P 500 closed 37 points higher. The
NASDAQ closed 123 points higher
Crude Oil futures (WTI-CME) closed $1.65 to $2.15 higher through the front six contracts.
“…while the four-firm concentration in fed cattle beef packing has remained relatively constant since 1994, the CPI (Consumer Price Index) for beef has been variable over that same period; sometimes above and sometimes below the overall consumer price index. If concentration is causing the recent rise in consumer prices for meat and poultry products, why did concentration not cause inflation five or 10 years ago?,” wonders Julie Anna Potts, president and CEO of the North American Meat Institute, in a letter sent Tuesday to Agriculture Secretary Tom Vilsack.
The letter was in response to a White House press briefing last week where the primary focus was climbing consumer food prices. Brian Deese, National Economic Council (NEC) director and Secretary Vilsack unveiled what they called a study. You’d be hard-pressed to find a credible economist able to connect the dots and conclusions. The abbreviated bottom line is that industry consolidation is at the root of higher red meat and poultry prices.
“…Just four large conglomerates control the majority of the market for each of these three products, and the data show that these companies have been raising prices while generating record profits during the pandemic…The dynamic of a hyper-consolidated pinch point in the supply chain raises real questions about pandemic profiteering. During the pandemic, wholesale prices for beef rose much faster than input prices for cattle. That means that the prices the processors pay to ranchers aren’t increasing, but the prices collected by processors from retailers are going up.”
There’s neither time nor space to start filling in the fictional holes and inferential leaps.
Good luck getting profit data from privately owned companies, which represent a fair bit of beef packing capacity. Never mind what gross packing margins have and don’t have to do with profitability.
Few would argue that food retail prices are increasing. As mentioned in yesterday’s Cattle Current, beef and veal values were 9.6% higher year over year in pandemic-ravaged 2020, according to according to the Consumer Food Price Index from ERS. Year over year in July, those values were 6.5% higher; 4.2% higher year to date compared to the same time last year.
Everything from increased labor costs and supply chain disruptions to inflation and derived demand contribute to increasing consumer prices and the price imbalance between industry sectors.
“Before the administration attempts to recreate the animal agriculture industry, it is prudent to look back and acknowledge the benefits that flow from the food supply chains as they exist, which ERS described as ‘efficient,’ Potts explained in her letter. “In 2020, according to ERS, Americans spent an average of 8.6 percent of their disposable personal incomes on food. Indeed, Americans spend less of their disposable personal income on food than any other country in the world. This remarkable drop is attributable largely to systematic efficiencies that allow food processors to offer food to consumers at lower prices.”