Recent trends in cattle and beef prices have a broad cross-section of people paying extra attention to the way money flows in the industry.
Last week, spreads between futures prices and boxed beef prices widened as the markets reacted to the coronavirus and consumers flocked to grocery stores to stock their freezers. Producers responded in uproar, and now everyone from trade associations to Ag Secretary Sonny Perdue say they’re keeping an eye on things.
“We are paying special attention to the difference in prices from the farm gate to the grocery shelf.… I expect all of our producers & stakeholders to be patriotic, honest brokers to ‘Do Right & Feed Everyone’ while we weather this pandemic,” Perdue said in a series of tweets over the weekend
The National Cattlemen’s Beef Association — which counts both processors and producers among its membership — sent a letter to the North American Meat Institute noting that “it seems the CME Group’s cattle futures products are falling victim to the overall market panic, invalidating them as a price discovery tool during this crisis.”
In response, NCBA asked NAMI members “to be aggressive in the cash market and base their bids on the increased cutout value we are seeing rather than the futures.” In a letter to NCBA, NAMI said it will "do everything it can to alleviate the adverse effects the pandemic is having on critically important suppliers."
One packer in particular has responded by offering a premium; Tyson says it will offer a “one-time premium effective for cattle harvested the week of March 23.” According to reports, that premium is $5 per hundredweight for live cattle and $7.94 for dressed cattle. A spokesperson for Cargill did not respond to questions about whether it will offer a similar premium, but said the company has “been in the cash market week in and week out.”
Representatives for JBS USA and National Beef — the other two members of the so-called “big four” group of packers — did not respond to Agri-Pulse inquiries.
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