Current Cattle Market Daily Headlines: Friday July 3, 2020

Mackenzie Johnston

6 years ago

U.S. cattle futures rise as corn prices ease

On Thursday, cattle futures saw some significant gains with feeder cattle leading the way.
According to traders, Thursday’s feeder cattle rally was due in part to a slump in corn futures.
Corn futures have declined due to the USDA cutting U.S. corn acres earlier this week, forecasts of timely rainfall across parts of the U.S. Midwest, and news that federal proposals about biofuel requirements are being put on hold.
The CME August live cattle contract rallied as we continue to see packinghouses slowly work through the industry’s backlog of cattle, and futures rose into a positive basis over recent cash market prices.
CME August live cattle settled at $99.40, up $2.10. August feeder cattle ended the day at $134.87, up $1.80.

Cash trade in the fed cattle markets is essential for price discovery as it is typically the basis of alternative marketing arrangements, also known as formulas. Besides that, cash prices undoubtedly influence a wide array of beef and cattle markets.
Some within the industry are hoping to increase negotiated cash trade through a federal government mandate, specifically the 30-14 campaign that would make the packers compete for cattle.
According to Stephen Koontz of Colorado State University, this proposal would cost the cattle and beef industry millions and possibly billions of dollars per year. Koontz made that statement in an open letter to the NCBA after some of his research was being used in support of the 30-14 campaign.
Koontz says his research shows that cow-calf producers and the U.S. consumers are the main beneficiaries of formula contracts.
Most folks within the cattle industry agree that our industry needs more cash fed cattle trade to enhance price discovery. Koontz, along with NCBA and many of their state affiliates do not support a mandate of a given percentage of cash trade to increase competition within our cattle markets.