Feeder, fed cattle market trends slightly upward, Trump win inspires optimism
November 11, 2016
Only twice in U.S. history did a Democratic candidate win the presidential election immediately after a Democrat just finished two terms in office.
So perhaps it shouldn't have been a surprise when, at about 2:30 a.m. mountain time, Nov. 9, news outlets started reporting that Republican candidate Donald Trump was, indeed the new president of the United States of America.
But it was.
Trump and Hillary Clinton alike, along with their supporters appeared stunned by the news that the billionaire real estate mogul had upset the former first lady, senator and secretary of state, to become the 45th U.S. president.
“Since the first part of October, we’ve gone up about seven dollars. If you go any further back than that, the market was still going the other way.”Ethan Oberst, CattleFax analyst
Media outlets including the social variety exploded with elation, excitement, frustration and bitterness.
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To say agriculture was not a key issue of the campaign would be an understatement. Even proposed agricultural policies on the candidates' websites were vague.
So when Speaker of the House Paul Ryan (R-Wisc.), in a press conference Nov. 9, talked about improving economic opportunities for food producers and others, some Americans were skeptical but others optimistic. "Think of the laid off coal workers who see relief coming, think about the farmers…who are being harassed by the EPA, and the Waters of the U.S., think about the ranchers in the West who are getting harassed by the Interior Department, or the laid off timber workers…. there is relief on the way," he said.
Media outlet Politico reported that Trump was discussing cabinet appointments including agricultural secretary the day after the election.
"Kansas Gov. Sam Brownback; former Nebraska Gov. Dave Heineman; former Georgia Gov. Sonny Perdue; and former Texas Gov. Rick Perry; as well as Charles Herbster, Republican donor and agribusiness leader; and Mike McCloskey, a major dairy executive in Indiana," are all maybes on the list for agricultural secretaries, along with current Texas Agricultural Secretary Sid Miller.
Politico reported that Trump plans to hire from the private sector whenever possible, but in the same story, it is reported that former Alaska Governor Sarah Palin is on the short list for secretary of the interior, along with several from the energy industry, and others.
Veteran food industry lobbyist Michael Torrey, according to Politico, is leading the ag department transition team.
OpenSecrets.org reports that Torrey's biggest client, at $240,000 is the Crop Insurance and Reinsurance Bureau. Other clients are: American Beverage Association, Dean Foods, Whitewave Foods, Illinois Soybean Association, Little Caesar Enterprises, SNAC International and Southeastern Lumber Manufacturers Association.
His website bio includes the following information: "A Kansas native, Torrey has more than 25 years experience in legislative and regulatory policy development, fiscal management, issue analysis, lobbying strategy, communications and association management. He specializes in food, agriculture, risk management and financial services.
"He has served as adviser to presidential candidate and Senate Majority Leader Bob Dole, an adviser to senators Nancy Landon Kassebaum and Sheila Frahm, deputy chief of staff at USDA, special assistant at the Commodity Future Trading Commission, and has served in numerous roles for state and national trade associations including the International Dairy Foods Association and Kansas Grain and Feed Association/Kansas Fertilizer and Chemical Association.
Trump has chosen Myron Ebell, a climate change skeptic associated with the Competitive Enterprise Institute to run the transition for the Environmental Protection Agency, while David Bernhart, co-chairman of the Natural Resources Department at the law firm Brownstein Hyatt Farber Schreck, will run the transition for the Interior, said the Hagstrom Report.
The cattle market
Ted Thompson, Whitewood, South Dakota cattle feeder and Superior Livestock representative said the feeder calf market has shown a little strength in the last couple of weeks, but he's not sure how the election will affect the market in the coming months or even years. He's hopeful that the new president's policies will favor domestic producers and and slow competing beef imports.
The recent upturn in the calf market, he believes is due mostly to the fact that more farmer feeders have harvested their crops and are ready to bid on cattle. Low prices for corn and other grains may have helped liven up the calf market a bit, he believes. "They've got a lot of feed that isn't worth much. When they decide to feed it rather than sell it, that helps on our end."
Ethan Oberst, a CattleFax analyst said the cattle market trend, in the big picture, remains the same as it has throughout the year, but he has seen a bright spot of late.
"Since the first part of October, we've gone up about seven dollars. If you go any further back than that, the market was still going the other way." Consumers tend to buy more beef this time of year, he said.
"We are still in a downtrending market," he said, but believes the market may have found a "short term low," and with the slight uptick in feeder calf prices across the region, good things might be on the horizon. "I've seen indicators that suggest stabilization going forward," he said.
More rain in the south, which could inspire more demand for wheat-grazing cattle, would push the market upward, this winter, he said. There are signs that next summer could bring a further softening of the market.
Ft. Pierre Livestock's Bryan Hanson was also pleased with the strength of the recent calf prices.
He said he's talked to many ranchers this fall about marketing calves and, for those trying to decide whether to wean or sell their calves off the cow, he says to look at the feed pile. "If you've got the feed and want to sell it through your calves, that's one thing. But if it's a situation where you wean and send the calves to a feedlot or buy all the feed yourself, that's more of a gamble, you are strictly gambling on the market."
While a weaned calf is more valuable as a rule than a bawling calf, "if you get three weeks down the road and you are selling weaned calves, the market could go up or down ten bucks a hundred. The market fluctuates."
His salebarn is scheduled to host a special bred cow and female sale Nov 11-12, and Hanson said typically the bred heifers head west of the Missouri River while older cows go east where silage and other feed is more abundant.
Now that more and more ranchers have marketed their calves, they should be ready to buy heifers, but Hanson worries that "the calf check probably didn't pay the operating note from last year, let alone leave enough to buy more females."
Imports including a recent influx of beef from Brazil have contributed to the depressed market, along with the repeal of country of origin labeling, Hanson said.
Hanson and Thompson both said that the feeding sector has lost enough money that the situation is dire.
Jack Hunter with Crawford Livestock, Crawford Nebraska, agrees. "We've got to get some black ink in the feeding sector before it will affect any of our producers. These feeders can't go on the way they've been going the last two years. The packers are going to have to give a little more to these guys."
Trump and agriculture
The new administration could play a role in that, all of the men in the marketing business believe. "What will have to happen, we'll have to slow down imports so we aren't getting dumped with cattle from Brazil or you-name-it. We need to get country of origin labeling back on so the consumers know what's going on, and get more fair trade rather than free trade. I think that's one of the things the new administration will probably help with.
"And we need a rain," said Hunter.
Hanson, who represents R-CALF USA, said that the Ohio Senator who represented then-candidate Trump at their convention was "very interested" in country of origin labeling. "From what I've seen of Trump, I think he'll be on board."
Thompson said farmer feeders and even feedyard managers he's visited with in recent days are optimistic about the election outcome. "This change is creating some optimism. Are we going to leap and bound and race to the moon? No, we've lost too much money."
But like Hunter and Hanson, Thompson hopes President-elect Trump will carry through with promises to address the trade deficit, de-regulate, and look at "America first."
The National Cattlemen's Beef Association President Tracy Brunner said in a press statement that his group continues to push for the Trans-Pacific Partnership, expanding foreign market access, and defunding of the Waters of the US rule, among other policy directives.
"We still need to get people back to work and improve the economy and they'll eat beef and spend some money on it," Thompson said.