Dr. Derrell Peel on the Ups and Downs of the Cattle Market
Oklahoma Farm Report
07 Jun 2021
Mondays, Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Mark Johnson. Today, Dr. Peel talks about the never ending excitment in the cattle markets.
Cattle markets are never dull but periods of relative calm and stability are sometimes interrupted by a few weeks of unusual daily and weekly dynamics that require constant attention. The past two years, however, have been more like a James Bond movie with a relentless series of unusual and unprecedented events that have kept the industry in a constant state of turmoil. Beginning with the Holcomb plant fire in August 2019, the industry moved into the early pandemic impacts by February 2020. The worst of the direct pandemic impacts on cattle and beef markets occurred between March and June of last year but the residual and ripple effects are still very much impacting markets today and will for some time to come. Deepening drought conditions across much of west added to the 2020 challenges and expanded into the plains, especially the northern plains, over the winter into this spring. U.S. hay supplies were down significantly at the beginning of the hay market year in May and drought conditions are impacting pasture and hay production thus far in 2021.
The unprecedented February winter storm affected most of the central part of the country with record and extended cold much farther south than is typical. Cattle producers faced enormous challenges to feed, water and most especially to save newborn calves during the storm. Widespread regional power outages and energy disruptions had massive impacts on feedlot operations in some regions, and resulted in brief packing plant shutdowns and reduced production. Corn prices began to increase last August and moved dramatically higher this spring. The highest feed prices since 2013 are expected to impact feedlot cost of gain and feeder cattle markets in the coming year at least. Large supplies of feedlot cattle, carried over from last year, resulted in fed cattle numbers that have exceeded packing capacity thus far in 2021, challenging packers to push cattle slaughter to the limit this year with large Saturday kills attempting to compensate for general labor limitations that have plagued the industry in recent years. The cyber-attack on JBS over Memorial Day caused additional reductions in beef processing and fabrication and created much short-term uncertainty in cattle and beef markets...