Cattle Prices High, Margins Tight — Packers Hit with Class-Action Suit

Cattle prices are strong right now, but high input costs are telling a more complicated story. Inflation has cut into profitability, leaving margins thinner than they may appear. Colorado State University Department of Agricultural and Resource Economics' Dr. Stephen Koontz talks about why he sees this challenge persisting for years to come.

“One of the things that has to happen on the cattle side is for there to be any sort of expansion in numbers, you actually have to tighten up supplies first. You have to hold heifers back. Be willing to hold heifers back, and then that makes for tighter situations, tighter prices, or higher prices yet before there's any sort of expansion, and the you know the jury is kind of out on whether expansion is happening. I know producers that are very interested in doing it, and I know producers, especially the further west to go, that simply don't have the pasture resources and they're looking to liquidate some animals. So lots of variability.”

Colorado State University's Dr. Stephen Koontz.

A federal judge, has certified a class action lawsuit accusing major beef packers of manipulating cattle markets and increasing beef profit margins. The case includes cattle producers who sold fed cattle to Cargill, JBS USA, National Beef, and Tyson Foods from June 2015 through February 2020. Producers allege the packers reduced slaughter rates, coordinated purchases, and created cattle backlogs to push cattle prices lower.