No Easy Fix For Cattle Market Downturn

“We are taking a lot of heat because people think we are not doing enough. But the issue is more complex; there is not an easy fix.”

This according to Melody Benjamin, vice president of member services with the Nebraska Cattlemen Association.

Benjamin’s comment was in response to the rumors that the packing industry was gouging the rancher. Articles and information had surfaced that large beef packing houses had the power to set cattle prices. Litigation and investigations had already started before the coronavirus, but the drastic drop in beef prices confused many people.

She continued, “People are hurting (meaning ranchers) and we are overwhelmed with calls.”

Recently, when the stock market plunged in response to the coronavirus, the cattle market also took a huge downturn. According to Benjamin, the cattle market is driven by the futures and the stock market. The futures market was signaling that there would be less beef consumed even though people were rushing to the store and making huge purchases.

She explained that Americans eat 60% of their meals away from home – and that the food service industries were closing and would not be purchasing beef. Even though individuals were making larger than normal purchases of beef, it still did not equal out. And so the cattle market is volatile now.

Complicating the matter, there is 8% more red meat now than at the same time last year. Why? Benjamin said that the 8% is a result of beef carcasses being heavier, and there is an increase in pork numbers – not weight but numbers. She said that pork weights don’t fluctuate, but the pork industry has added more animals.

On a personal note, Benjamin talked with a meat cutter and the cutter reported that there was a huge rush on ground beef – and that is what drove the market higher in the grocery store. Regionally, there was more demand than supply, but that leveled out when buying steadied. The meat cutter said that many people just buy hamburger because they don’t know how to cook other cuts of meat.

Nebraska Gov. Pete Ricketts said it was important to keep the cattle moving to keep the supply and demand in check. Therefore, brand inspectors and sale barns are deemed essential.

Brand inspectors and sale barns are following the guidelines established throughout the state of Nebraska, including social distancing, using hand sanitizer when hand washing is not available, and not being around groups.

Benjamin ended on a more positive note as she said $9.5 billion of the recently announced stimulus is earmarked for livestock. Besides cattle, other livestock producers are part of this package, such as hogs and the dairy industry.

“Some will come back,” she said.

It probably will take some time because they still must write the rules and the USDA will have to write the program.