Letting the Markets Do What They Do - Economist Glynn Tonsor Explains AllWed, 16 Oct 2019 07:47:57 CDT
According to K-State Extension Livestock Market Economist Dr. Glynn Tonsor, cattle markets have mostly recovered to what they were just before the Tyson plant fire that occurred out in western Kansas. Boxed-beef prices, which spiked right after that event, are too back at levels just below what they were prior to the fire. Tonsor says, this all has to do with markets- doing what markets do.
“There are a lot of things that go into the establishment of prices in live and feeder cattle and wholesale beef markets. That fire and supply chain disruption certainly played into that, but it’s certainly not the only thing that the markets have recovered,” he said, adding why that is a good thing. “The fact that the wholesale beef market has pulled back isn’t necessarily a good thing if you want to talk about it from a producers’ perspective, but market will do what markets will do if we let them.”
Tonsor explains that there was an obviously strong reaction from the market after the fire occurred. Over time, though, he says fundamentals supported prices as the industry worked through the surprises and uncertainty that followed in the fire’s wake. Eventually, Tonsor says the markets were able to once again find its equilibriums. He remarked that the fact the industry has been able to pull both fed and feeder cattle prices up is a really good thing.
“I would submit the strong wholesale beef prices are part of that because that has given buying power to buying cattle, whether it’s live or feeder cattle. It’s not by accident those margins here improved consistent with cattle price improvement,” he said. “So, there’s a lot of good things here, but if I had to put it in a bow – markets adjust… They adjust hard when we have a shock, like with the fire, and if we give them a little bit of time – then the markets will adjust and go where they need to go.”
Listen to Tonsor’s full analysis of the market’s recovery since the Tyson packing plant fire incident, on today’s Beef Buzz with Radio Oklahoma Ag Network Farm Director Ron Hays.
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.
WebReadyTM Powered by WireReady® NSI
Top Agricultural News