Banks vs. Small Beef Producers

This is Matt Rice with the Market Line Report for Oct 12th. The beef market is wreaking havoc on smaller producers as they struggle during these hard times. Let's go to Todd Horwitz, from the floor of the CME to hear more on the livestock market.

Horwitz "Taking a look at the fat cattle, live cattle markets and of course what are we seeing, we're seeing tremendous selling pressure here. We're seeing a real big panic forcing small farmers to make a decision and where is that pressure coming from? It's really coming from the banks, the banks cannot take that pressure even from the farmers that are hedged. They are forcing the liquidation, very much like it happens in the equity markets and they are basically making margins forcing the small guys to sell out at limits that they really don't want to be out at. Now, when that happens the packers also know that there's being forced liquidations. So when we see a forced liquidation the buyers dry up even further, creating more of a downward suction."

Chicago March Wheat prices closed yesterday up 1 ¼, at 425. March corn ended the day up 2, at 355. Portland prices for soft white wheat of Ordinary Protein for Feb. ended the day unch- up 1 ¼, ranging from 4-95 to 5 even. Hard Red Winter wheat with 11 ½ % protein, prices for Feb. were dn ½, ranging from 4-98 to 5-13. DNS wheat with 14 % protein, prices for Feb. were up ¼, ranging from 6-26 ½ to 6-44 ½. Feb. Live Cattle were dn 42 ½ cents, at 99.85. Jan. Feeder cattle were dn 35 cents, at 114.87 ½. Dec. class III milk was dn 31 cents at 14-91.