The Government Accountability Office Tuesday issued a report on its study of issues affecting the US cattle market and made two recommendations to the Secretary of Agriculture that could affect data sharing at the government level.
The GAO made two recommendations: that USDA review the extent to which, under statute, the price reporting group can share daily transaction data with the Packers and Stockyards Program, and, if the USDA determines the statute does not permit such sharing and it is advisable, submit to Congress a proposal to allow such sharing.
The report said the USDA determined the act does not allow for such sharing and that it would not be advisable citing concerns about the public’s trust in the program.
Fed cattle prices fluctuated substantially from 2013 through 2016. For example, they increased by 39% between 2013 and 2014, then dropped by 42% by the end of 2016.
Cattle producers have raised questions about these fluctuations and USDA’s oversight, prompting the GAO study.
FACTORS AFFECTING CASH CATTLE MARKETS
The GAO found Supply and demand factors, like a drought that affected the price of feed, affected changes in fed cattle prices from 2013 through 2016. According to industry experts and GAO’s analysis, a drought from late 2010 to early 2013 led the cattle inventory to fall and rise and, in turn, fed cattle prices to fluctuate.
The GAO’s analysis of cattle market data from the USDA also indicated that competition levels among packers did not appear to affect the national fed cattle price changes in 2015 but that areas of the country with less packer competition had lower cattle prices.
CFTC FINDINGS
The Commodity Futures Trading Commission did not find evidence of trading irregularities in the cattle futures market in 2015 the GAO said.
However, to better align futures contracts with the actual fed cattle market, the CFTC reviewed changes to contract terms and will continue to monitor those changes, the GAO report said.
The Packers & Stockyards Program, which oversees the cattle industry within the USDA’s Agricultural Marketing Service, does not have routine access to daily transaction data between feedlot operators and packers. These data are collected by AMS’s price reporting group, which does not routinely share them with P&SP because, officials said, it is prohibited by statute from doing so.
The Livestock Mandatory Reporting Act of 1999 specifies that the Secretary of Agriculture may authorize the sharing of data for enforcement purposes, which the USDA interprets as an ongoing investigation, not market monitoring.
In November, the USDA reorganized the P&SP under AMS and officials said it was too soon to determine whether the AMS would view routine sharing of data any differently.
CATTLE, BEEF RECAP
On the Livestock Exchange Video Auction Wednesday, 232 head of Nebraska cattle sold at $118 per cwt; 127 Kansas cattle sold at $117.59, and 59 head of Texas cattle sold at $114 with a 17- to 30-day delivery window. Cattle sold last Wednesday on the video auction at $117 per cwt.
Cash cattle were at $117 to $118 per cwt on a live basis, the top of last week’s $115 to $118 trade. Dressed-basis trading last week was at $188 to $190, down $2 to $4.
The USDA’s choice cutout Thursday was down $0.59 per cwt at $212.48, while select was up $0.06 at $200.67. The choice/select spread narrowed to $11.81 from $12.46 with 115 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Wednesday, was $135.76 per cwt, up $0.91. This compares with Thursday’s Apr settlement of $138.87, up $3.60.