Crazy Cattle Market
The Cattle Markets have been a little all over the place recently.
Dr. Stephen Koontz of Colorado State University is considered by many - including the NCBA as an expert regarding the cattle market, and discusses the current volatility.
Working in the cattle industry has never been easy. Each day contains unknowns such as weather, unpredictable short-term market moves, or typical logistical challenges to manage. But when the unknowns rise to the level of a national or even global focus, it becomes more difficult to manage emotions and maintain perspective.
The COVID-19 situation has dominated media coverage and markets for much of the past month. Volatility and uncertainty have ruled the day, and for good reason. We are in uncharted waters, not only from a financial standpoint, but also from a health and safety standpoint.
But while this situation is unique in the threats and challenges it poses, we must remember that at some point, this too shall pass. No one can yet tell when exactly that will be, nor what changes, if any, the new normal will contain. But there will be a normal again. And in the meantime, there is much to be said for all of us keeping that in the forefront of our minds.
Not 1st beef financial crisis
People throughout the cattle industry have weathered difficult storms before.
The early Christmas news of the first U.S. BSE case in 2003 was a major challenge. The loss in financial footing resulting from the economic recession in 2008 and 2009 was a serious event. Yet, in both cases, cattle markets and industry participants recovered from those uncertainties and continued to push forward.
Everyone reading this column likely has a personalized list of events that proved particularly challenging to their individual or professional livelihood, yet you have persevered.
Have cattle markets responded particularly negative to the coronavirus situation in terms of both downward moves and volatility? Yes. Are there other issues out there that make dealing with this challenge more difficult and uncertain? Yes. But remember, some economists in 20 years will be looking back at this time to compare it to whatever the issue of those future times happens to be. We will get through this.
The graph of live cattle futures contracts during tough times shows the severity of the COVID-19 news in early to mid-March. However, live cattle futures markets have recovered as boxed beef prices moved substantially higher as consumer demand in grocery stores has been incredibly strong for beef products.
Push through cattle market uncertainty
There are many questions about where cattle markets will move from this point forward, and it remains difficult to have all the right answers. There are some critical pieces to watch in the weeks and months ahead.
First, as the U.S. continues to practice social distancing and large portions of the economy remain essentially shut down, the chances of a substantial economic retraction increases. The recent record 3.3 million jobless claims provide the first clear sign on the potential economic slowdown.