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Agricultural News


Feeder Cattle Prices Sink Sharply Lower- Decline Blamed on Global Growth Worries

Fri, 28 Aug 2015 05:38:53 CDT

Feeder Cattle Prices Sink Sharply Lower- Decline Blamed on Global Growth Worries


The pressure on the feeder cattle markets in Oklahoma, Missouri and Kansas has been tremendous over the last couple of weeks- and every market that is reported by USDA Market News has shown nothing but red ink- lower prices- on both yearling and calf prices. The losses have ranged from two to ten dollars on yearlings this week- and calf prices, where there has been adequate numbers for a test, have fallen from eight to thirty dollars a hundred.

Yearling price drops have included the Oklahoma National Stockyards three to eight dollars lower on Monday of this week, Joplin five to ten dollars down, OKC West $2 to $7 cheaper, Pratt, Kansas five to eight dollars lower and Dodge City $7 to $10 down on yearling steers.

Calf price drops have been evern more extreme- Oklahoma City reported a $10 to $15 drop on steer calves and $15 to $30 per hundred drop for the females. Joplin reported steer and heifer calf prices were down by $10 to $20 and the Southern Oklahoma Livestock Market in Ada showed a mid week decline of $10 to $15 on Wednesday.

Kansas State University Extension Livestock Market Economist Glynn Tonsor said international worries of global growth has translated into a real chill onto the cattle market. China is at the core with concerns of the health of the global economy, but he said this extends beyond China.


“When global growth shrinks or more narrowly ,when there is expectation that global growth economic activity is going to shrink, meat trade tends to slow,” Tonsor said. “U.S. ability to export ‘valuable products’, like beef and other commodities to Asia, which is a major importing region in the world tends to shrink. That adds a bearish tone, in the sense that how many of these pounds we produce are going to have to stay at home, because global economic growth is slowing.”


The broader economy has shown its concerns in having crude oil prices reach a six year low, the stock market has dropped substantially and the equity market has signaled concerns. There is uncertainty of when and how much interest rates will increase. Tonsor said a lot of those things on the table right now, might look like they are outside the cattle market complex, but in looking at the important role of trade, the impact becomes more apparent. The strength of the U.S. dollar has a direct impact on exports and Tonsor said that’s a core reason why the cattle markets have gotten beat up in recent weeks. Global instability brings concerns for beef demand and right now there is a large amount of feeder cattle that are on pasture, that will be headed to feedlots very soon. Tonsor said all of those factors have added more bearish pressure on the market.


Instability in China’s economy, creates concern for the entire Pacific Rim, which is a major importer of U.S. Beef. Tonsor said that’s one of the concerns of the overall cattle market, with fears of a replication of the recession from the late 1990’s.   Tonsor said that hurt meat trade in a big way and any exporting country, like the U.S,. was greatly impacted. He isn’t ready to call this a repeat of the Asian 1997 case, as there are a lot of differences.


“We have a pretty good handle on the supply side and we’re not going to immediately drive prices lower with supply, over time that happens,” Tonsor said. “This is all about the demand side, is just how much is demand going to get beat up by all these signals and in the short term, prices are going to take a big hit, if we continue with those huge macroeconomic adverse demand signals.”


Radio Oklahoma Network Farm Director Ron Hays featured Glynn Tonsor on the Beef Buzz feature. Click or tap on the LISTEN BAR below to listen to today's Beef Buzz.


The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network- but is also 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.


      
   

Ron Hays Beef Buzzes with Glynn Tonsor of K-State
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