Pete's Comments

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Cattle markets have been in a free fall the last few weeks; just when we think fed cattle inventory is matching weekly slaughter levels, something happens at the packer level and we have an instant backup. 

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We have a distribution crisis, and we’ve been spoiled by companies like Amazon and online merchandising—order today and get it tomorrow, or even the same day. I think the race to be the quickest distributor has created the problem of being the consistent distributor.

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I hope you have all been watching the migration of the African swine fever (ASF) over the past few years. The virus started in Africa but has migrated throughout Europe and Asia. 

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Fed cattle markets have been stubborn. I think everyone was expecting to see fed cattle trading for $130 across the board by now. Futures markets offer a bit of encouragement, then they drift lower, and cattle feeders let them go for lower money.

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Consumer demand hasn’t shown any signs of slowing down. The government has been handing out lots of money, with added benefits to the 40 million folks on the food stamp program and the $300 a month child tax credits. I can’t wait to see how the $3.5 trillion social handout goes.

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I was reading the Saturday edition of the Wall Street Journal last week, and a full-page ad caught my eye in a big way: a full-page ad promoting the sustainability and nutritional value of the U.S. beef cattle industry. This may be the boldest use of Beef Checkoff dollars I’ve ever seen.

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After all the government hearings and stuff in Washington, USDA didn’t waste much time developing a new price distribution report for beef-type fed cattle and a new twice-a-day report for formula base purchases.

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It’s remarkable how much attention the cattle and beef business is receiving from Congress. The government isn’t going to help much and it worries me about what they might do.

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With all the talk about cattle feeders losing so much money it’s surprising they are paying more for feeder cattle. We’ve had some great tests in the market on fall-delivered calves the past few weeks. 

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After being relatively quiet the last year or two, the American Prairie Reserve (APR) is making news again. It has long been known that APR’s goal is to remove domestic livestock from land under their control and bring in bison. 

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There was a bit more optimism in cattle markets last week. Packers stepped out early in the week and started buying cattle up to $3 higher than last week, $125.

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The federal government is finally listening to you about the state of the cattle market. USDA announced that they were planning on investing $4 billion in the food infrastructure of the U.S., from production, processing and distribution to consumer markets. I always get nervous when the government shows up and says, “We’re here to help.”

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What happened at JBS was just another blip on the screen, pointing out more vulnerabilities. Having your data center hacked has become common these days and the government needs to provide security for this valuable infrastructure.

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How high can beef prices go before we have a consumer revolt? I’d say we’re getting close. My hope is that the packing industry is so profitable that it will attract some new major players and create competition that way. 

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I know it’s frustrating for cattlemen to see the beef cutout over $300 while watching live cattle prices go down. Nearly all beef profits are going to the packer right now. Packers are gorging themselves at the trough of prosperity.

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Western wildfire is clearly a big issue, especially after last year’s record wildfires. Everybody knows something needs to be done and straightforward plans are still in discussion.

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The National Cattlemen’s Beef Association came out with their analysis of their 75% Plan to invigorate the cash fed cattle markets, and realized that two cattle feeding regions were not able to reach their cash trade targets.

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There has been a lot of hubbub about Denver’s National Western Stock Show (NWSS) and the Cattlemen’s Congress show in Oklahoma City, which jumped on top of the NWSS dates. The Oklahoma Chamber of Commerce and several other opportunistic groups, including cattlemen, are essentially trying to supplant NWSS, a major national stock show.

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There is a stark conflict that has been emerging for some time: government responsibility vs. personal responsibility. It’s difficult for me to understand that the government can spend nearly $10 trillion in less than a year.

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Looks like cattle feeders are tired of this slow-moving market and digging their heels in for higher money. Packers have been enjoying very good margins and it’s time to share the spoils and get feeders back into a profitable situation, which they haven’t seen for a while.

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The Public Lands Council held its annual meeting last week in a virtual setting, which isn’t as much fun. They had a serious meeting and I learned a lot about the agencies they need to work with and the various conservation partners they work with.

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Politically, we live in disturbing times. They say real politics are local and they are. Here in Colorado, we have two random citizens—activists—proposing a ballot measure to amend Colorado’s animal cruelty laws.

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It doesn’t appear that folks have much patience to see how NCBA’s 75% Plan will work. We haven’t even reached the end of the first quarter of information to evaluate. 

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The Department of Interior (DOI) is an important agency to all Western public land resource users. President Joe Biden’s nomination for the DOI cabinet post, Rep. Deb Haaland (D-NM), is causing quite a controversy.

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The Biden administration has gotten off to a quick start with all the presidential orders President Joe Biden has produced in the first 30 days. This outfit worries me when it comes to the public lands. 

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Cold weather moved in and it looks like it intends to stay awhile. We can sure handle cold weather, but it would be better if some moisture came with it, and we can sure do without the wind. 

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Time marches on and we how have a historic West Coast auction market closing shop. Shasta Livestock Auction is closing shop and having their last sale Feb. 12.

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I have been watching the Southern Plains cash marketing volume for a couple months and Texas has been consistently selling between 15 and 20 percent of their cattle on the cash market. Kansas has been doing the same.

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I’ve got a feeling we’re heading into a repeat of a 2013-14 weather pattern which was the most damaging period to the livestock business I can remember.

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Crazy world we live in. The riot that happened at the Capitol last week was atrocious and captured the attention of every U.S. citizen. The changing of the administration will be drastic with both Senate and House committees being run by the majority, the Democrats. 

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It’s interesting to me that financial markets are ignoring the mayhem in Washington. The stock markets are moving higher, and the commodity market too. 

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I suppose everyone has COVID fatigue. But now that we have a vaccine available, we can see some light at the end of the tunnel. Politically, it’s going to be an interesting four years. 

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Who is going to add value to your cattle, the consumer or the order buyer? Last week R-CALF USA released their five-year plan for the cattle industry. It looks like they condensed all the issues they have been working on over the past 20 years into their five-year plan.

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It’s looking like the cattle markets have nearly shut down for the rest of the year through last Wednesday. I would say, if you don’t need to sell them, don’t. Make the packer come to you and set a higher price.

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Cattle markets are starting to struggle again. Jan. 1, 2021 is when NCBA is to start monitoring negotiated cash sales on fed cattle. 

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Last week the folks at JBS Pork division were fined $24.5 million to settle a price-fixing lawsuit. We all know that the Justice Department Antitrust Division is investigating the beef industry, for the same thing. 

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Animal identification has been on my mind the past few months, ever since USDA announced they want you all to start using radio-frequency ID (RFID) tags instead of the metal bangs tags you get today. 

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Water is in short supply in the West as it has always been. Last week, we learned the Chicago Mercantile Exchange (CME) is going to try and capitalize on Western water, specifically California water. 

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We have a few weeks to go before this unprecedented presidential election is over. With this COVID-19 pandemic, it has made everything more than interesting. With all the mail-in ballots and social distancing, it may take some time before we know who the next president will be.

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Ten executives in the chicken industry have been indicted on price fixing and it looks as if the Department of Justice (DOJ) has compelling evidence. Then the pork and the beef industry had price fixing cases dropped recently, and some are still pending.

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Negotiated cash trade has been an issue for the NCBA marketing committee for a while. The idea that NCBA and their affiliates have is to create a cash selling pool. 

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The beef packing business has gone through many trials and tribulations since the early 2000s. Most of the big packers changed hands in the early to mid-2000s.