The Montana Farm Bureau has joined 26 other state Farm Bureaus in signing a letter to Secretary Sonny Perdue requesting his attention on two important matters: relief to cattlemen seeing increasingly volatile markets and investigating any price manipulation that may be occurring in the cattle industry. In addition, the states asked that the USDA look into ways to use the Commodity Credit Corporation funds to help in this time of crisis.
“While we are pleased the Coronavirus Aid, Relief, and Economic Security (CARES) Act provides $9.5 billion for various agricultural industries, we must ensure struggling cattle producers receive enough assistance to help make up for the significant losses they have endured,” noted Montana Farm Bureau National Affairs Director Nicole Rolf. “Specifically, we asked the department to direct support to the stocker and cow/calf producer, the actual rancher or farmer, as these people have shouldered the brunt of this market decline. Farm Bureau supported the passage of the CARES Act and worked to secure funding that will help cattle ranchers, as well as producers of all commodities, affected by the COVID-19 pandemic.”
Rolf had visited previously with Montana Senator Steve Daines about difficulties farmers and ranchers are facing. “One of the concerns we discussed was this discrepancy between retail demand and futures prices. Senator Daines has signed on to a letter to Attorney General William Barr asking the Department of Justice to investigate possible anti-competitive behavior and price fixing in the beef markets.”
In addition, American Farm Bureau has been in discussions with the Commodities Futures Trading Commission (CFTC) about factors affecting cattle markets.
“We have a good relationship with the CFTC so we will continue to follow up with them regarding our concerns and relevant information,” Rolf added.
Another factor to consider is the general economics of beef pricing, including why beef prices in the grocery store have soared.
“The beef cutout just skyrocketed, and it hit historic levels, the highest increases we’ve seen in just seven days,” noted American Farm Bureau Economist Michael Nepveux. “On top of that, you saw live and fed cattle futures decline substantially, and you even saw cash prices drop. There’s a lot of confusion in the beef markers and the cattle markets.”
Nepveux said consumers' habits during the panic-purchasing is behind some of the volatility. “It still remains to be seen how long this stocking phase is going to continue. When consumers rush to fill up their freezers, the freezers become full. We’re still not sure how long this panic buying is going to continue in different parts of the county, and once they go back to week-to-week purchases, the meat cases are going to be full, and you’ve seen many meat cases around the U.S. already kind of go back to normal.”
He added that the futures market has been incredibly volatile. “Looking forward, we’re looking at an economic recession hitting the United States. That doesn’t bode too well for beef in the future because beef is one of those luxury goods in terms of animal proteins, and as consumers lose paychecks, you might see a little bit of a tougher environment for beef.”
To read more on the reason behind beef prices visit AFBF’s MarketIntel report:https://www.fb.org/market-intel/pandemic-injects-volatility-into-cattle-and-beef-markets.