CALF_News_June_July_2020

6 CALF News • June | July 2020 • www.calfnews.net Coping with COVID-19 By Larry Stalcup Contributing Editor T here have been wrecks, bad ones, like the 1970s beef price freeze, the ‘80s whole-herd dairy buyout and the 2008 recession that have cost the beef industry big. Then there’s this virus – ‘nuff said. With COVID-19, the beef industry has projected losses that top $13 billion. There’s continued worry that agricul- ture’s share of the government’s trillion- dollar stimulus packages won’t offset already-crashed cattle prices. The biggest gripe from cattlemen is the gaping gap between prices they received from packers and the price packers received for processed beef. That gap widened quickly. On April 2, The Texas Cattle Feeder’s Association (TCFA) market report showed carcass cutout prices at about $232/cwt., com- pared to fed steer prices of $112. The cutout prices stayed in that range through April 17. But by April 30, they had surged to $367. They topped $458 on May 7. After reaching nearly $500, they had settled back to near $434 onMay 15. Meanwhile, fed prices, already slump- ing, struggled to stay above $100. And June Chicago Mercantile Exchange (CME) futures were $15 to $20 below that before rallying to above $92 from May 7 to May 15. On May 15, fed cattle prices fin- ished with a little rally, with an aver- age of about $112/cwt. That was still more than $320 below the cutout price gobbled up by packers. It was impossible to mask the out- rage among seedstock, cow-calf, stocker and cattle feeding operations. Were the Big Four – Tyson, Cargill, JBS and National – illegally manipulating prices? Were alleged antitrust violations fact or fabricated? From the National Cattlemen’s Beef Association (NCBA) to the Ranchers-Cattlemen Action Legal Fund (R-CALF), many sectors of the beef industry called on Congress and the White House to examine whether antitrust laws were broken. On April 8, NCBA sent a letter to the Trump administration, calling for investigations into antitrust violations. NCBA President Marty Smith signed the letter, noting that it was a follow-up to an inquiry last fall into the impact on markets after the Tyson plant fire in Holcomb, Kan. “Now, six months into that [Hol- comb] investigation, we are asking for the current market volatility to be ana- lyzed and incorporated into that ongoing investigation,” Smith said. It was “in the hope of identifying whether inappropri- ate influence occurred in the markets, and to provide our industry with recom- mendations on how we can update cattle markets to ensure they are equipped to function within today’s market realities.” NCBA also asked the Commodity Futures Trading Commission to study the influence of speculators on the CME Group’s Live and Feeder Cattle futures contracts.“[This is] to determine whether the contracts remain a useful risk-management tool for cattle produc- ers. Fair and functioning cattle markets are vital to the sustainability of our industry,” Smith said. June Live Cattle futures plunged from $120/cwt., in January to an anguishing $80 by early April. Basis was minus $20 from the cratered cash price. There was virtually no way to efficiently manage price risk. NCBA called for the U.S. Depart- ment of Agriculture (USDA) to work closely with the Department of Justice SICK Country, SICK Cattle Markets GOVERNMENT ABOVE: Would mandatory negotiated cash trade cut premiums for better quality cattle?  