- Surge in negotiated cash prices drive December live futures, fed market shows improvement
Beef Read reported that the surge in negotiated cash cattle prices to $128 Tuesday – the highest since April 2019 — has catapulted December live cattle futures. December reached $132.40 today, a new spot live cattle high and the highest since June 2017.
As of this morning, packers had bought only 17k head, so they will have to work harder to accumulate inventory which has not be true for a very, very long time.
Negotiated cash cattle prices have stalled out in the $130 area since 2017 too, when cash reached $144 on a spring rally. So finally, the fed cattle market is showing true improvement for the first time since numbers cyclically peaked in 2019, only to be waylaid by a plant fire and a global pandemic.
Supplies of market-ready fed cattle are tightening and front-end supplies are finally getting cleaned up. Fundamentally it’s not a stretch to expect fed cattle prices to surpass $130 and trade above that level until the 2022 spring high.
Wholesale values are advancing seasonally, up $8 or so off the lows and will continue strong until early December typically. Packer margins will probably stay very profitable as cattle prices increase, but not continue at the extreme levels that have been seen for months in 2021.
- Don Close worries about mandated cash cattle trade
According to the Oklahoma Farm Report, while the cattle industry looks to increase robust price discovery through cash trade, many producers and industry experts warn of the dangers of mandating cash trade as many agree that mandated cash trade directly threatens alternative marketing agreements and grid-pricing of cattle.
Don Close, a senior animal protein analyst at Rabo AgriFinance told Radio Oklahoma Ag Network that there is no doubt that the cattle industry could use more cash trade, but needs to be careful to not disincentivize the producers working within AMAs as when cattle started selling on individual carcass merit, that is where the incentive came to make those cattle better.
Going back to any kind of mandated percentage would shift the industry back into selling cattle on the average which, according to Close, would “absolutely disincentivizes that quality improvement and be a horrible mistake for the industry.”
Right now, the federal government is working on solutions for the beef cattle industry, one of which would be to mandate a certain percentage of cash trade.
At the same time, Close does support increased cash cattle trade as he believes an increased volume of cattle will provide a greater level of confidence throughout the market and that there is valuable opportunity to advance the market in pricing cattle off of cutout.
According to Close this could resolve a lot of the friction between producers of transaction types, but also knows it’s a big reach to make that leap, and believes that as leverage neutralizes and the industry continues to push the envelope in how it markets cattle, that is when the issue will rectify itself over time.
While he sees producers fed up with the norm not working and understands why they are looking for change, he warns that shooting from the hip to make changes just for changes sake, is dangerous.
- Maine voters pass the nation’s first ‘right to food’ amendment
According to the Portland Press Herald, Maine voters passed the nation’s first “right to food” constitutional amendment on Tuesday.
A statewide referendum asked voters if they favored an amendment to the Maine Constitution “to declare that all individuals have a natural, inherent and unalienable right to grow, raise, harvest, produce and consume the food of their own choosing for their own nourishment, sustenance, bodily health and well-being.” It was an experiment not tried before by any state.
Supporters used the campaign to make the case the amendment would ensure the right to grow vegetables and raise livestock in an era when corporatization threatens local ownership of the food supply, positioning the amendment as a chance for Mainers to take control of the food supply back from large landowners and giant retailers with little connection to the community.
Opponents cast the drive as deceptively vague. They also said it represented a threat to food safety and animal welfare, and could encourage residents to try to raise cows in their backyard.
The proposed amendment was the result of effort by members of the state’s food sovereignty movement. The movement includes small farmers, raw milk fans, libertarians, liberals and anti-corporate activists who all feel local communities should have more of a say in the future of the food supply.
The Maine Farm Bureau, the largest farming advocacy group in the state, opposed the new constitutional amendment, but said Tuesday the bureau respected the will of the state’s voters.
- Lack of truck drivers the biggest ag supply chain problem
According to the Hagstrom Report, the House Agriculture Committee held a hearing Wednesday at which various sectors within agriculture discussed their immediate supply chain problems while House Agriculture Committee Chairman David Scott, D-Ga., and House Agriculture ranking member Glenn “GT” Thompson, R-Pa., disagreed about whether the Biden administration is to blame for the problems.
After the hearing, Scott said that it was abundantly clear that the key piece as we address supply chain issues facing our food supply is recruiting and retaining more commercial truck drivers to transport food and agriculture commodities across the country. Scott confirmed that while our food supply is abundant and there is no cause for panic, more than 15,000 vacancies for truck drivers and 17,500 warehouse vacancies is a serious problem.
Although Scott confirmed that these challenges are largely driven by the pandemic, Thompson said he was disappointed that the administration was not represented at the hearing as he considers them “one of the main culprits” in the supply chain problems.
Thompson said, “In too many instances, the White House uses industry as a scapegoat rather than partnering with them to solve problems. While we can mull other factors like natural disasters, much of what we are hearing today is how…the policies under consideration by this administration are compounding — instead of mitigating — this crisis.”