Kay: Price reporting invaluable to livestock and meat industries

Prime Cuts with Steve Kay

Good market information, particularly regarding prices, is the lifeblood of the livestock and meat industry, in which millions of dollars change hands every day of the week. “Good” information, however, must be accurate and unbiased, as comprehensive as possible, timely and easily accessible, and understood by all market participants.

Today’s cattle producers throughout Canada can be thankful that those before them, all of 50 years ago, saw the need for such information and founded Canfax. Much has been written this year about its history, so I won’t dwell on those years. But it is fair to say that the Canadian beef industry owes a great deal to Canfax’s founders, its staffers who developed and expanded its services, and most of all, to every producer who supported it and does today. In Canfax’s case, its information is only as good as those who provide it.

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This is also true in the U.S. where CattleFax last year also celebrated its 50th anniversary. CattleFax has grown over the years to be a global leader in beef industry research, analysis and information. It also offers research, analysis and information for the grains, energy and protein sectors, including pork and poultry, as well as trade. Like Canfax, CattleFax’s members are mostly cattle producers who provide it with a host of price and other information.

However, the U.S. meat and livestock industry has an even more comprehensive price reporting system that is the envy of the world. At any given moment of the day, one can find everything from the latest feeder cattle prices at auctions around the country to what kidneys or other steer byproducts sold for the day before. In all, USDA’s Agricultural Marketing Service (AMS) issues more than 300 market reports each week that detail livestock and meat price trends, contracting agreements, and supply and demand conditions, while protecting the confidentiality of proprietary transactions.

Given the plethora of price information today, it is easy to forget it didn’t used to be like this. Until the late 1990s packers were not required to report the prices they paid for animals or the terms of sale. But as more and more animals were sold under formula pricing, other contract or captive supply arrangements, the open cash markets became less helpful as benchmarks. There were also growing concerns in the mid-1990s in the industry and Congress over packer concentration as meat packing companies were consolidating and getting larger.

The result was the Livestock Mandatory Reporting Act of 1999. AMS then implemented its Livestock Mandatory Reporting program in April 2001. Mandatory price reporting, through the Livestock Mandatory Reporting program, has been re-authorized regularly since then. The current Livestock Mandatory Reporting Program authority is set to expire September 30, 2020. AMS has also, in consultation with industry groups, expanded its cattle and other reports.

Two of USDA’s most valuable cattle reports are its daily regional direct cattle slaughter report and its monthly Cattle on Feed report. No other country with a cattle feeding sector of any size publishes monthly reports, let alone with such detail. The reports provide on-feed inventory, placement and marketing data for the 12 largest cattle feeding states and a U.S. total. It also provides a placement breakdown in six weight categories, from under 600 pounds to 1,000 pounds and over.

These breakdowns are invaluable in allowing analysts to forecast likely marketings in the months ahead. This and other data that USDA provides give cattle producers added confidence to make informed decisions about everything from selling their calves to retaining ownership through the feeding phase. Such data is the lifeblood of the industry.

About the author

Contributor

A North American view of the meat industry. Steve Kay is publisher and editor of Cattle Buyers Weekly.

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