Cattle Market Volatility Stressing Producers, Lenders, and Consumers

AMARILLO, TX – The beef pipeline is designed to give price signals at every transfer of ownership point. Apart from the weather, these price signals govern the flow of cattle through the pipeline and indicate when the domestic herd needs to grow or shrink. According to The Cattle Market website, the price points also serve another important role in stabilizing the price of beef in stores and restaurants. Erratic and volatile price moves turn off consumers and make meat dealers nervous. The recent market moves stress those handling cattle but they also threaten an even flow of cattle throughout the beef pipeline. Many cattle will be forced off pasture next month as May is normally the end of the winter grazing season across the southern plains and in the south. The bunched up groups of cattle that have not moved in March and April, have been pushed to May but few producers are able to continue feeding much longer.

In addition, concerns from lenders are transferred to cattle owners as large changes in the borrowing base or inventories of cattle stress the equity base of the industry. Cattle financing is always important to cattle owners and some breeders and stocker operators are evaluating retained ownership options into the feedlot. Rather than accept distressed prices for replacement cattle, some will choose to feed the cattle. Unfortunately, those owners will be faced with cautious lenders who already are plagued by loans with inadequate margins and large losses. Even feedyards that always provide financing are growing cautious both in evaluating the value of the cattle coming into the yard and establishing monitoring of their value on a weekly or monthly basis.