Agricultural News
Superior Livestock Executive Describes How New Online Auction Site is Combatting Market Volatility
Wed, 23 Nov 2016 17:19:57 CST
Over the past few decades, fat cattle cash trade has declined as more feeders sell their cattle based on formulas or grid pricing, rather than through the cash market. It has become typical now to only see cash cattle trade develop once a week, occurring late on Fridays generally and all at once. This has in effect caused instability in the marketplace, where now volatility runs rampant as markets struggle to compensate for a variety of circumstantial factors, including the increased fat cattle weights from last year, herd rebuilding and increasing numbers, plus a higher dollar. This week, Farm Director Ron Hays met with Kurtis Ward, executive vice president of Superior Livestock, who has been working closely with industry leaders to help alleviate this volatility and ultimately fix the issue in a way that meets modern demand and convenience in today's trade.
It was earlier this year after a proposal for an online venue to sell fat cattle was made during the Livestock Marketing Committee meeting at the National Cattlemen's Beef Association convention, that Superior's FedCattleExchange.com was born, says Ward.
"I really thought the idea had merit," Ward said. "After having several meetings with industry participants, cattle feeders, packers alike, we put together this online fat cattle cash auction that's called Fed Cattle Exchange."
The website was rolled out in May of this year. After some trial and error, Ward says he is proud to report that the site has had its best month yet this November with 13,428 head sold with a weighted price of $106.79. The website is unique in the way it operates. Although everything in the process is done virtually, packers still have the opportunity to see the cattle in person, and can pay as they normally do, and have until Wednesday of each week, when the auction begins at 10:00 a.m. CST.
"We were not expecting to have the overwhelming response we had," he said. "We've been seeing the trade develop and really excited about seeing some good concrete cash trade numbers at midweek, something we haven't seen in the past.
"We're hoping that Fed Cattle Exchange will be at least one of the components that allows the cash trade to be more transparent midweek and maybe one of these days we'll be able to go to auction more than one day a week."
Looking forward, Ward notes that Superior's goals for Fed Cattle Exchange in the coming year is to reach above that 20,000 head level. He also says they are considering having a day dedicated to moving Holsteins to meet an opportunity window in the dairy sector. Until those decisions are made though, Ward, who chairs the Cash Price Discovery sub-committee of the Livestock Marketing committee for NCBA, says he will keep working with others in the beef community and the CME Group to make continued improvements in the industry.
Ward will join Radio Oklahoma Ag Network Farm Director Ron Hays for his weekly In the Field segment on KWTV News9 in the Oklahoma City area on Saturday morning at 6:40 a.m.
To listen to Hays' full conversation with Ward regarding the Fed Cattle Exchange and how he and his partners are working to combat market volatility, click or tap on the LISTEN BAR below.
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