UT Beef and Forage Center

Agriculture Economics- Article

Andrew Griffith

Dr. Andrew Griffith, Assistant Professor, Department of Agricultural and Resource Economics

(865) 974-7480

agriff14@utk.edu

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In the olden days, it took four letters or less to form a curse word and occasionally someone would find a way to get a fifth letter into their cursing. The four-letter curse words have been mainstays in the cattle business. We like them because they are simple. We know them because we like them. We use them because we know them, and many of us are not smart enough to stop using them.

There is a reason the words are short and that is because the person is in a hurry. There is no time for someone to say “oh supercalifragilisticexpialidocious” when a cow starts bearing down on them and there is no fence to climb. Who says “that is the best cow I have” as she climbs two gates that were just hung last weekend? Better yet, who says kind words or has good thoughts when they see a cow having calving difficulties or another dead stocker calf? Some of these words are said in anger, others in disgust, and others under our breath because we feel defeated.

The curse word vocabulary is rather small when considering the English language which means most people are familiar with most of the words. However, there have been some recent additions to the common list of curse words. The human race has evolved or grown in understanding of the alphabet and now use six letter curse words such as cattle, market, prices.

One can hope that cattle market prices have turned around by the time this article reaches mailboxes, inboxes, or internet posting, but at the beginning of March it does not seem likely. As of this writing, the August feeder cattle futures contract was trading around $135 per hundredweight which is $20 per hundredweight lower than the apex for that contract. This equates to $160 per head loss in value in two months. The local cash market is nothing to write home about either. The spring calf market has fallen to pieces, and the yearling cattle market is in shambles. Essentially, the coronavirus scare has been a miniature atomic bomb to cattle markets, other commodity markets, and equity markets.

As this article is being written, it is difficult to determine who in the cattle business is taking the worst of the beating. In the short term, margin operators including stocker producers and cattle feeders are taking the biggest hit. Margin operators purchased cattle on a much stronger market and are now being forced to market cattle at severely depressed prices. Not if but when the market turns around, margin operators will be the first ones to reap the rewards of the market price improvement. Most cow-calf producers have yet to witness the lower cattle prices, because most of them have not marketed any cattle in the past couple of months. However, if the market stays depressed as fall born calves go to market and into the summer and fall months then cow-calf producers will likely feel as if they are having to pay someone to buy their cattle.

The way this market is acting, the use of cattle, market, prices either individually or as a group seems like dirty words. It seems like it is time to bring out the bar of soap and wash out a person’s mouth when they utter those words, but the CDC would say the soap is better used for washing people’s hands to slow down the spread of coronavirus. However, none of those things change this situation as it relates to the price of cattle and where the market is expected to move from its current location.

The simple of it is that cattle prices are struggling through a time where most countries are concerned about a human health issue. There is no perfect way to manage through it, and the path will be different for many folks. Small cow-calf producers will just have to keep pushing through the mess and count on off-farm income to support the business. Large cow-calf producers may consider alternative marketing methods. Margin operators should consider using the futures market for cattle that will be purchased in the second half of the year and starting into 2021. The hope is that our six letter curse words stop being so abrasive to our ears and turn into soft sweet music that puts us at ease. It will happen, but when it will happen is the question.