Beef Buzz News
Texas AgriLife Economist Justin Benavidez Says 75% Measuring Improvement in Negotiated Trade
Thu, 21 Oct 2021 10:50:47 CDT
Right now, beef prices and beef demand are high, allowing record-breaking profits for the folks on the processing end of the industry. At the same time, there is still a backlog of live cattle due to the ongoing COVID-19 pandemic, which is having the opposite effect on the folks who raise cattle.
Listen to Ron's conversation with Justin here.
To help cattle producers through an industry-led manner, the NCBA came up with the 75% Plan, which went live in Jan. 2021. The plan is designed to encourage increased negotiated trade in the fed cattle market to achieve robust price discovery. Since processors participate in the plan voluntarily, it was not until the third quarter of the year that measurable packer data was available.
Today, Radio Oklahoma Ag Network Director Ron Hays sits down with Justin Benavidez, assistant professor and extension economist at Texas A&M University, to go over Benavidez’s analysis of the first three quarters of the 75% Plan’s debut year.
“The third quarter is sitting in a pretty good spot in terms of negotiated trade volumes per the 75% Plan,” Benavidez said. “Overall, negotiated trade is up quite a bit, with the bulk of that being in negotiated grid with negotiated cash standing about where it has been, with fluctuations depending on the week.”
Compared to the first two quarters of the year, Benavidez said third-quarter figures show U.S. cattle markets performed very well in terms of hitting negotiated trade thresholds each week. The first quarter saw the Texas, Oklahoma and New Mexico region fail to meet its trade goal for four of the 13 weeks in the quarter, while the Kansas region missed six weeks and the Nebraska and Colorado region missed two. With all that red on the chart, a minor trigger was tripped, according to Benavidez. The second quarter saw much improvement, with the Texas, Oklahoma and New Mexico region only missing three weeks, he added.
“We only missed one week in Texas, Oklahoma and New Mexico in the third quarter,” Benavidez said. “That is a little bit contrary to what history would tell us for the Southern Plains.”
Historically speaking, Benavidez said the second quarter of the year should have been the least at risk for failing to meet the robust thresholds of negotiated trade. From that same perspective, the third quarter figures should be more in line with the first-quarter figures, he added.
“We have improved in a quarter that was a pretty high-risk quarter, compared to what my forecast would have told me,” Benavidez said.
With the industry deciding that this was a way to push for more transparency, with the ultimate goal of higher prices, the feeding industry had made a real push to meet the parameters set by the NCBA, Benavidez said.
Click on the LISTEN BAR below to hear more from Ron Hays and Justin Benavidez as they talk about third-quarter figures of the 75% Plan and the different types of negotiated trade that make up the cattle market in the Southern Plains.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
Photo: Probability of Failing 75% Volume Chart by Justin Benavidez.
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