A Few Thoughts by John Nalivka: Price Discovery
Price discovery in the live cattle markets has been a much discussed and cussed topic over the past few months. That’s not a surprise given the performance of the market which is not necessarily an exact science. It’s not the only thing in today’s world that isn’t an exact science. But, back on track to price discovery. I made the comment a few weeks ago that it has been a hot topic going back quite a few years and I found just the article as I was cleaning out my files to illustrate that very point.
As most of you might have presumed, I have boxes and boxes and more boxes and files and bookshelves with USDA price reports and livestock market research going back to – well, I will put it this way, way too far. That’s in addition to the electronic data and information that I have on a hard drive. But much of the paper I accumulated while working for ERS in Washington, D.C. as well as hand written data that my good friend and meat industry consultant George Abraham gave me.
So last week, I (okay my wife and I) decided I should make the attempt to begin going through these boxes. Afterall, do I need the price of calves in Nebraska in 1950? You never know! So, in the process of working on this task, I began reading a market commentary from April 24. The headline said, “Price Discovery is Key Issue.” The first sentence reads, “the growing inadequacy of price discovery and reporting ticks like a time bomb under the beef industry.”
The next headline says, “Live Market is Critically Thin” while on the next page, “July is Crunch Month”, and “Record Marketings Ahead.” And finally, on page 3, we see the top headline, “More Heavyweights on Feed?” with the first sentence in that section, “record or near record numbers of heavier cattle will be on feed.” And finally, “Dry Weather Still a Concern.”
While it may sound very familiar with market commentary written on April 24, 2020, I am actually quoting from Steve Kay’s Cattle Buyers Weekly – April 24, 1989. Just as in 2020, that date also fell on a Friday.
Maybe markets and the industry don’t change as much as we think they do. New normal?! My wife does hope for a “new normal” with those boxes of paper in our storage shed!
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