Market confusion overshadows cattle report

Confusion in the cattle market caused by the coronavirus pandemic and subsequent onslaught of closures and cancellations overshadowed this month’s cattle on feed report.

Key issues currently facing cattle farmers include maintaining their ability to sell animals for processing and trying to obtain a fair price.

Prices for the week averaged around $110 per hundredweight. Farmers saw a drastic drop in prices before a late week rally provided some correction, but not enough to offset losses.

“Obviously, there’s a lot of confusion going on in the trade,” said Rich Nelson, director of research at Allendale, Inc. in McHenry. “One note of frustration is we’ve seen over a $40 rebound in wholesale beef as consumers stockpile, however, the trade’s not noting that carry over onto the cash cattle side.”

The National Cattlemen’s Beef Association sent a letter to Capitol Hill urging members of Congress to include relief funds for struggling cattle farmers in any kind of federal aid package.

“These highly volatile markets cannot be allowed to force our ranching families out of business just when consumers need them most,” the NCBA letter noted.

USDA last week noted it plans to maintain timely delivery of service to maintain the movement of America’s food supply.

As for the latest cattle on feed numbers from USDA, cattle and calves on feed for the slaughter market totaled 11.81 million head March 1, up 21,000 head from a year ago.

However, placements in feedlots declined nearly 8% to 1.71 million head. Marketings of fed cattle totaled 1.78 million head in February, up 5% from a year ago.

“That (drop in placements) was within the trade’s expectations,” Nelson said. “We had a light supply moving into feedlots in the early portion of February.

“These numbers don’t impact short-term production numbers,” he continued. “But they will impact summer through fall supply levels. We’re likely to see a very tight supply in the fourth quarter.”

Nelson believes feedlot placements could decline the next three months due to sale barn closures and farmers holding numbers back.