Cattle markets remained positive last week. After the negotiated cash trade volume of 103,000 head two weeks ago, it seemed like everyone realized that, yes, packers were running thin on supply. Last week’s trade was at $125-129.50 for live cattle. There was some early trade in the week at $130 in Nebraska, while Southern Plains feeders passed on $130 and priced cattle at $132.
The fickle futures markets showed more enthusiasm this week with the December live cattle contract gaining a couple dollars to $131.65 and the February contract at $136.65 on Wednesday. Slaughter two weeks ago was 668,000 head as packers geared up for holiday beef sales. It appears packers will reach that level again for the most recent week. The Choice cutout has bottomed and gained a few dollars to post at $289.54, and Choice beef production has fallen a bit.
Feeder cattle futures markets are having a hard time getting over the $160 barrier—the deferred futures for the next calf run in August and September are well into the $170s. All signals are green: The Feeder Cattle Index was at $155.81, and volatile corn prices are keeping a thumb on feeder cattle markets.
Trucking has become a big issue, and we are in a high-demand season for cattle trucks. Nationally, it is estimated that the trucking industry in general is about 80,000 drivers short of demand. COVID-19 might have aggravated the issue, but getting truck drivers has been a constant problem.
The House Ag Committee recently held another hearing on current food supply chain problems and bottlenecks. They heard from the trucking industry, wholesale grocery industry, food processors and directly from the food manufacturing and farm supply industries.
The basic complaint was needing more labor and better logistics between transport segments, from container ships to port managers, truckers and warehouses. Everything is backlogged and not getting to destinations on time, and it’s getting more expensive, contributing to inflation.
Jon Samson, vice president of conferences with the American Trucking Associations, said the labor problem has been with them a while. They have been recruiting young drivers earlier by working with junior colleges and even getting involved with FFA to recruit drivers. The problem is they only retain 10 percent of those drivers beyond a year. He also said younger drivers between 18-21 years old can only drive intrastate routes, by regulation.
Samson also said COVID-19 vaccine mandates have had some effect, especially with the larger trucking companies that have over 100 employees and are government contractors. Then there are hours of service and electronic logging device issues.
Next, there is the international shipping issue. The U.S. exports roughly 25 percent of its ag production, and that means going through the ports with containers. West Coast ports are the worst because we have so much trade volume with Asia. The Biden administration persuaded the longshoremen to start working 24/7 on West Coast ports to clear the backlog. Many ag exports to Asia are now going through Portland, OR, a less congested port. Now the shipping issue is starting to affect farm inputs like fertilizers, crop chemicals and all the inputs needed for next spring’s planting.
This panel couldn’t emphasize infrastructure enough. We have an antiquated river transport system in need of new locks and dams on Midwest river routes. They said you can’t move efficiently on bad roads or bridges.
The government is saying that 5 million people dropped out of the workforce since the pandemic started. These were mostly low-wage hospitality workers and roughly 2 million baby boomers taking early retirement because housing and stock market gains made them feel good about their financial position.
Moving America’s ag products is a primary responsibility for the administration, keeping people fed. The day will come when we have driverless trucks and combines—it must happen. There will be more technology entering food processing soon. The government should make immigration a high priority and fix policy to allow America to run better and do business. But I don’t think this administration gets it. Get your trucks ordered early. — PETE CROW
