![]() This next graph is where things get interesting. The rationale here is that live cattle prices would have to be cheaper due to the temporary lower slaughter capacity. ![]() The same declines occurred in the live cattle market shown in the graph below. The action in the futures market was clear, but so has been the drop in auction prices over the past 2 weeks. Perhaps the first thing that most cow/calf or stocker producers notice is the impact on feeder cattle prices. As shown in the graph above, the boxed beef cutout value has increased sharply since the fire. This, combined with the lower cattle prices shown below, has led to some very large margins for packers which is a strong economic incentive to figure out a way to offset the loss in packing capacity. This week’s newsletter will be more visual than usual because I think these graphs tell the story well. The Tyson Fire is now two weeks behind us and we are starting to get a better picture of the impacts on markets and production. More to come as more information is released… I’ve discussed how important a deal with Japan would be many times in this blog (see here, here, and here). There are few details now and the agreement is not formal yet, but overall it is great news for the beef industry. and Japan have agreed in principle to a deal that would reduce tariffs on U.S. Special Note: News over the weekend reports that the U.S. Prices may not get all the way “back” partially because seasonal patterns usually negatively impact prices this time of year. This is an improvement from the 6 to 10 percent drop seen in the week after the fire. Auction prices have recovered some since the lows seen the week following the fire. Mississippi auction prices were 4 to 7 percent lower last week than the week prior to the fire depending on weight class. It is also important to note that August is usually a little stronger than July – a bump which did not happen this year.Ī common question right now is “when will prices get back to where they were before the fire?” But the story is more complicated than that given the time of year that the fire occurred: right before prices usually find a bottom. The story is the same for Mississippi and most Southeastern states. Seasonally, either September and October are the lowest price months of the year for both fed cattle and feeder cattle due primarily to large volumes. Using the Alabama price index data above, September prices for 600-700 steers are 3% lower on average than during August and October prices are about 6% lower. In short, they are the normal price patterns throughout a year driven by production and marketing patterns. We have discussed seasonal patterns in this newsletter before (see HERE). One of the key factors that usually pushes prices lower during this time of year is seasonality. But this is far from the only factor affecting cattle prices, especially as more time passes since the fire. This event negatively impacted cattle prices and will remain a key topic throughout the Fall. The past few weeks we have focused on market reactions to the Tyson beef plant fire (read again HERE, HERE, and HERE).
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