Published: October 10, 2008 09:23 am            

Cattle market feels pain of stock market

In the fray of an uncertain stock market, cattle prices have taken a nose-dive along with wheat and corn prices in recent weeks.

But the trend, while it appears to darken the horizon for wheat and cattle producers here, should stabilize, say local producers and experts in the cattle industry.

Dale Moore is a local cattle producer and owner-operator of Cattleman’s Choice Feedlot.

“Well, my crystal ball broke a long time ago, but I think that the current cattle prices are definitely linked to the economy but not because of cattle,” Moore said.

Moore said he believes the current stock market trend has trickled into the commodities market, such as cattle and wheat, partially because there are some traders in both the stock market and the commodity market and some of those same people are selling everything.

“I think what we are seeing is an overall panic in the fund market and there is a lot of panicked selling with no paper on the other side to buy it.”

The futures on cattle are trading according with the Dow, Moore said. “This is not a supply and demand issue, it is a total economic issue.”

Indeed, in the last three weeks, cattle have seen a steady decline in price per hundred pounds. The prices have decreased, depending on the type and sex of the calf, from $1 to $6 per hundred pounds, according to USDA market reports.

In May, a steer calf that weighed about 400 pounds brought about $548 in this region. Just this week,the same calf weighing 400 pounds brought about $492.

Wheat prices have also been driven down by the uncertainty of the markets in the last few weeks. This was following a strong market this spring that saw nearly double Thursday’s price for Hard Red Winter Wheat, which remained steady Thursday at about $5.21 per bushel locally.

While corn has also dipped in price, the commodity saw an increase in price Thursday. But high corn prices before recent market woes have proven pricey for cattle producers who are feeding fat cattle in feedlots with corn purchased and contracted at earlier higher prices. That means the grain that puts meat on a calf costs the same while the return per pound of beef has decreased, producers said Thursday.

But according to Moore, the current market will rebound, but more slowly and more realistically.

How should cattle producers react to this market? “By not panicking first of all, Moore said. “You need to have a good management plan, a good marketing plan and carry on business as usual.”

Moore said it is more important now than ever to forge solid relationships with the management of their sale barns, feed yards and brokers.

“The times we are facing dictate that they have to build these relationships to make sure they are on top of what is happening in the whole cattle picture rather than shooting from the hip.”

Clair Craighead is a Woodward County rancher and farmer who has been pleased with how his cattle have performed at the market until the recent downturn.

Craighead believes that while the cattle market may be reacting to the wide swings of the stock market, he also believes that the current trend is also linked to consumers who have lost confidence and are less willing to spend.

“Right now, with all this going on, the consumer is not willing to pay the price for beef and they are buying cheaper meat,” he said.

But Craighead is also optimistic about the future for cattle, even expanding his cattle herd at a time when some may choose to do otherwise.

“Of course, this market will come back because it always has and I want to be there when it happens,” Craighead said.

        

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