Some said it couldn’t be done — five major US cattlemen’s association officials meeting together, in one place, to talk about ways to improve cattle price discovery – but it did.
But will anything change? Will it get any easier to figure out just what cattle are worth? Will fewer fed cattle be sold to beef packers in a manner that disguises what was paid? Will more be traded on an open market? Will more beef be traded on an open market?
THE MEETING IN PHOENIX
In a joint press release, the American Farm Bureau Federation, National Cattlemen’s Beef Association, National Farmers Union, R-CALF USA and the United States Cattlemen’s Association met in Phoenix, Ariz., Monday. There were there at the request of the Livestock Marketing Association of Overland Park, Kan., a trade association dedicated to serving members in the open, competitive auction method of marketing livestock.
They were there “to discuss challenges involved in the marketing of finished cattle with the ultimate goal of bringing about a more financially sustainable situation for cattle feeders and cow/calf producers,” the release said.
They talked “openly and candidly” about issues like packer concentration, price transparency and discovery, packer oversight, Packers and Stockyards Act enforcement, level of captive supply and packer capacity, the release said.
At the end of the day, attendees agreed to take some “action items” to their respective organizations; things like expedite the renewal of the USDA’s Livestock Mandatory Reporting, including formula base prices and the creation of a contract library.
They also would gauge member response to a demand for the Department of Justice to issue a public investigation status report and possibly conduct joint DOJ and USDA oversight of packer activity moving forward. Lastly, they would seek to have their organizations encourage investment in, and the development of, new independent, local and regional packers.
A SKEPTIC WEIGHS IN
Nothing will get done from this, said ADMIS market analyst Chris Lehner. No one will divulge what they are paying or being paid and how any transaction is being done, he added.
Part of the issue is the growing size, buying power and demands of the largest beef buyers in the country, Lehner said.
Those forces of nature must plan their purchases months, and even a year or more in advance. Besides getting the logistics in place to service hundreds of retail outlets, they must plan for marketing pushes, holidays, trucking availability and meat availability.
But the main force behind this move to greater up-front planning is money, he said. They need to get the banks to finance their purchases and business plans, and the best way to do it is to show they have the contracts.
CATTLE, BEEF RECAP
Fed cattle traded this week at $119 to $120 per cwt on a live basis, up $1 to down $2 from last week. Dressed-basis trading was at $189 to $191 per cwt, steady to down $1.50.
The USDA choice cutout Tuesday was up $3.72 per cwt at $323.34, while select was up $2.16 at $299.05. The choice/select spread widened to $24.29 from $22.73 with 74 loads of fabricated product and 40 loads of trimmings and grinds sold into the spot market.
The USDA reported Tuesday that basis bids for corn from livestock feeding operations in the Southern Plains were not available but Friday were unchanged at $1.05 to $1.19 a bushel. The Jul CBOT futures contract settled Tuesday at $6.58 1/4 a bushel, up $0.05 3/4.
The CME Feeder Cattle Index for the seven days ended Monday was $133.70 per cwt down $0.20. This compares with Tuesday’s May contract settlement of $137.20 per cwt, down $0.72.