USDA publishes cattle and beef pricing report
USDA releases long-awaited study of cattle markets
The U.S. Department of Agriculture today (July 22, 2020) released its report on cattle and beef pricing resulting from both the the August, 9, 2019, Tyson plant fire and in the 2020 COVID-19 pandemic.
USDA says in the 21-page report that it does not examine potential violations of the Packers and Stockyards Act.
The report, which can be found here, and has been greatly anticipated by cattle producers and feeders across the country, basically shares the prices of boxed beef and fed cattle throughout the two events.
Charts show the significant spike in the spread between boxed beef prices and fed cattle prices during both the pandemic, and the weeks following the plant fire. The increase in the “spread” or difference between beef and live cattle prices of course coincides with data that shows spikes in cattle prices and drops in cattle prices.
The report specifically states that findings thus far do not preclude the possibility that individual or groups of entities violated the Packers and Stockyards Act.
“The investigation into potential violations under the Packers and Stockyards Act is continuing. USDA does not solely own investigatory authority over anticompetitive practices in the meat packing industry and has been engaged in discussions with the Department of Justice (DOJ) regarding allegations of anticompetitive practices in the meat packing industry. Should USDA find a violation of the Packers and Stockyards Act, it is authorized to report the violation to DOJ for prosecution,” said the report.
The report discusses mandatory price reporting and how the lack of market participants reduces the amount of information being reported, particularly because of confidentiality rules that preclude many of the sales from being publishable.
The report then goes on to discuss Iowa Senator Chuck Grassley’s 50/14 bill and addresses regional concerns regarding the suggested 50 percent “spot market” mandate.
“Such regional disparities might be addressed in part by tying the minimum purchase thresholds to regional reporting abilities. Under this approach, if an LMR region began to fail to meet confidentiality guidelines due to packers not procuring cattle on a negotiated cash basis, with the proper legislative authority, AMS could track and inform packers of the requirement to make an additional percentage of such purchases in the following week to allow for reporting. This would not place further reporting burden on packers as AMS Market News already receives data from beef packers on both a company and plant basis, broken down by purchase type, including negotiated cash sales. Computer programming could be implemented to more readily track negotiated cash sales as a percentage of company or plant purchases. If Congress did provide this additional authority, careful consideration must be given to the time period in which the purchase requirement would apply.”
Risk management options and small and medium sized packer opportunities were talked about later in the report, along with possible updates to the Packers and Stockyards Act.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User