In mid-September, the CME board wasn’t very friendly and had a quick minor correction across most values; however, it isn’t a time to panic. The fundamentals and infrastructure are still in place to hold the cash market for now. There are a lot of factors at play that need discussed.
The Bureau of Labor Statistics (BLS) releases its jobs report monthly. Like any federally released report, there is a margin of error that we have to assume is in every report. Not just in jobs, but commodities, cattle and so on. Reasons for this could include employers being slow to report current jobs, the lag time and simply inaccurate data. We’d like to assume there is no political bias from one administration to the next, but that is wishing for a perfect world. This goes both ways, regardless of who sits in the Oval Office.
Last month, the report claimed only 22,000 jobs were added to the economy, down from the 75,000 economists had anticipated. Additionally, the June report was later revised to show a loss of 13,000 jobs reported. The report also claimed 4.3% unemployment, which is the largest amount in the last few years. Amid consistently poorer-than-expected monthly reports, President Donald Trump fired BLS Commissioner Erika McEntarfer via social media. White House spokespeople then went on to cast doubt on the agency’s credibility. In a speech given recently, McEntarfer said she didn’t know she had been fired until a news outlet called her to comment. McEntarfer was also a Biden appointee. I’m normally a Trump supporter, but this seemed petty.
The biggest shakeup was the largest revision of numbers in the month following McEntarfer’s exit, which was that 911,000 fewer jobs had been added to the economy from March 2024 to March 2025. This was nearly half as many jobs as were reported in the monthly reports. Please keep in mind this number also needs to be finalized and is a preliminary estimate, and was released after McEntarfer was let go. Why this is frustrating ties back to Federal Reserve Chairman Jerome Powell and the fact that the Fed had not cut interest rates based on data, with a big driver being the jobs reports as an indicator of economic health and stability.
Analysts were again and again surprised they hadn’t reduced rates multiple times throughout the year. Now, with the revision, the Fed immediately cut 25 basis points for the first time since last December and are expected to make multiple cuts through the end of the year. With nearly 1 million less jobs reported as previously thought, the image of a weaker economy immediately sent signals that a rate reduction is paramount. For reference, this cut is estimated to save credit card users $1.92 billion in interest over the next year.
My take? It’s actually quite simple. Why does the federal government rely on outdated methods of data collection? The digital ways to gather data could streamline processes, create more accurate data and allow the population to make more educated decisions and remove opportunity for political bias. One could argue the whys and why nots on this for eternity and never get anything accomplished. Second, tying this back to the beef industry, is that we have to recognize that the CME, the stock market and investment measures are more tied to headlines and politics that drive quick, reactionary daily swings in the market, and oftentimes do not tie back to the actual infrastructure and fundamentals of industries.
The beef cattle industry is a perfect example of this. Nearly every month has shown sharp decreases as boxed beef prices also closed sharply over the last several trading sessions. Speculation on several fronts also contributed to this, including expectations that U.S. Agriculture Secretary Brooke Rollins will be announcing updates on the U.S.-Mexico border relating to the New World screwworm. In addition, the next Cattle on Feed report will be coming out soon, which is also adding anxiety to this marketplace. While all this was going on in the headlines and political scope, the cash market across the country continued to set new daily records for every weight class. The disconnect between speculatory trading and the cash markets is widening, but at these figures, it gives the opportunity for an even larger gap.
Lastly, the big question out there has been that of heifer retention and herd rebuilding. While there is conversation about it, action hasn’t been taken yet. With the cull cow market reaching record highs, the economic incentive to sell marginal cows and heifers is keeping a downward pressure on herd rebuilding. From my own operation, we did our fall work recently and looking at the data, my bred heifers that performed poorly and bred later will not last in my operation any longer because of what they’ll bring in town. I think the majority of operations out there are operating just like I am. Now isn’t the time to panic over headlines, it’s a time to clean your herd up and position yourself financially for a better future. — LOGAN IPSEN
