Welcome to the Friday edition of the HOT BARN REPORT
Heard ONLY on American radio stations across the nation and online at hotbarnreport.com!
Karina Jones, Field Director for R-Calf USA joins us each Friday from her ranch in the heart of Nebraska covering what’s new and important to the family farm and ranch.
A fourth Black Swan or just more of the same?
Welcome back to this Friday edition of Hot Barn Report! Oil is up. Corn is up. Groceries are up. Everything is up. But, cattle are down.
When crude oil goes up, so does diesel and gas. The output product follows the input product. So, if the cattle market functioned competitively like the gas market, then we would fully expect cattle prices to increase so the supply chain could recover the added cost of corn and inputs.
But that’s not what is happening. IA/MN fed steer averages are down $2 from last week. And that occurred even though Central corn prices were about $6.51 per bushel, right after the invasion in the Ukraine and by yesterday the Iowa average corn price closed at $7.12/bu.
Cattle futures continue to take a bigger hit than cash cattle, indicated on Tuesday that feeder cattle futures are down $16 per cwt in two weeks. I see how this works. The cattle supply chain doesn’t have any leverage in our system to be able to recoup rising input costs.
According to estimates released this week by the USDA, the average monthly net margin for feeding cattle in the United States was a negative $4.36 per cwt. That’s an average monthly loss of over $56 per head each month for 12 months.
Say what??? Prolonged and chronic fed cattle losses occurred when consumers were paying all-time record high prices for beef and our Beef Checkoff keeps going on and on about demand and exports.
The cattle market has persistently produced negative cattle feeding returns in the face of record-high beef prices, and neither Congress nor the Administration has taken any meaningful steps to correct this. And now we have what may soon be coined the cattle industry’s fourth Black Swan event since 2019, where fast-rising corn prices worsen what is already the worst economic cost-price squeeze that U.S. cattle producers have had to face in decades.
So, what are we going to do? Some in academia tell our administration to just wait it out. Or how about those groups that are working backroom deals with lawmakers on a hollow compromise bill. We need another hollow compromise like we need another Black Swan. But, I’m telling you, if we don’t act with COURAGE and URGENCY this domestic cattle industry is going to fold, specifically our independent cattle feeding sector who cannot continue to shoulder feeding losses any longer. USDA data proves that our cowherd is shrinking. Between market volatility and drought, there is no indication of optimism in herd rebuilding.
R-CALF has stayed the course in the courtroom and in Congress! We are not wavering because the American cattle industry cannot stand for weak, watered-down representation any longer.
Stay the course with us! We are all better working together to pass S.2716, the mandatory country of origin labeling bill that will empower consumers to once again send competitive demand signals for American cattle; and pass S.949 that will force the packers to compete for cattle.
Monte James will be back on Monday to give you a run down of next weeks action at the best price discovery centers in the nation! Crawford Livestock, Platte Livestock, Presho Livestock, Mobridge Livestock, Lemmon Livestock, North Platte Stockyards, Creighton Livestock, Stockman’s Livestock, and Bassett Livestock.
The HOTTEST sale barns in America
See more at HOT BARN REPORT
As always buy ’em up online at CattleUSA.com
Creighton Livestock Market
Lemmon Livestock, INC.
Presho Livestock Auction
Mobridge Livestock
Platte Livestock Market
Stockmen’s Livestock
Crawford Livestock Market
North Platte Stockyards
Bassett Livestock Auction
