CALF_News_June_July_2020

11 CALF News • June | July 2020 • www.calfnews.net 866-666-7626 ADMAnimalNutrition.com/Beef Today’s choices drive tomorrow’s reality. Follow ADM Cattle Nutrition At ADM, everything we do starts with the hard work of farmers and ranchers. ADM Animal Nutrition is dedicated to providing feed and resources to support our industry partners who are an inspiration in their resiliency and commitment to supporting our nation’s food chain. Cattle nutrition done right. Legislative Affairs and Market Regu- latory Policy, and Stephen Koontz, Colorado State University agricul- tural economist, tackled the question of whether “one size fits all” in cash marketing. “I understand the frustration. But we need to do things science-based,” Koontz said.“There’s not a real simple answer to price discovery. The incentives to go to formulas and forward contracting are there – they result in better calf prices. If you legislate things [cash trade], you limit your flexibility for change.“ Koontz said it’s important to use objec- tive research in helping solve the lack of cash trade issue.“Big operations need to move cattle every week. Packers need to move product every week. If formula cattle work well, it goes back to better prices for cow-calf producers. But in that process we have lost some depth in price discovery.” Koontz said more industrialized feed- ing operations use more formula pricing for cost mitigation.“They capture premiums for quality,” he said.“But you can lose robustness of a negotiated cash market. Front and center is Texas and Oklahoma feeding. There needs to be additional cash trade. “To a lesser extent are issues in Kansas and Nebraska. Also in Colorado, with only two packers buying cattle. But Texas needs to do something about it [negoti- ated cash] and it needs to be real soon.” Ross Wilson, CEO of Texas Cattle Feeders Association, tells CALF News negotiated cash trade has averaged 6 percent; negotiated grid purchase has averaged 1 percent; forward contracts have averaged 6 percent and formula trade has averaged 89 percent in Texas, Oklahoma and New Mexico feedyards since the start of 2020. However, the high number of formula-priced cattle has generated higher prices for quality cattle.“The ability for cattle feeders to market fed cattle based on carcass characteristics has allowed both cow-calf and feeders to be rewarded for decades of investments in genetic improvements and feeding practices,”Wilson says . “Over time, more producers have chosen to market their cattle in this manner, in lieu of only marketing cattle SICK COUNTRY, SICK CATTLE MARKETS Continued from page 7 Continued on page 12  TCFA CEO Ross Wilson sees the need for more cash trading, but not under government mandate that could reduce prices to producers of high-quality genetics.