Mild winter weather created near-perfect conditions for livestock producers, with cooperative grazing and feeding opportunities across much of the country.
"The pounds have been easy to come by," says Eric Relph, a Nebraska cattleman and Commstock Investments broker, in this week’s episode of Ag Marketing IQ In Depth.
Relph says favorable conditions extended grazing periods for winter wheat and supported strong carcass weights. This has driven record-setting live cattle prices, with recent cash sales reaching all-time highs on both live and dressed bases. The market continues to push toward previous highs after a correction earlier in the year.
However, he says that could quickly change. "The biggest bearish story right now actually is these great conditions," Relph warns. Though the current market feels "10 feet tall and bulletproof," Relph urges caution.
What not to be concerned about? Beef from Argentina. The Trump administration increased the quota for Argentine beef imports, but the market impact is negligible.
“You can say the quota was changed to a five-fold quota, but they've been importing around 45,000 tons anyway,” Relph says. So, even if the full allotment comes in from Argentina, he notes that’s only 100,000 tons. “And, quite frankly, we need the supply at this point in time.”
Use beef protection tools
The most visible reason for market concern is New World screwworm, a fly-borne parasite that’s showing up near the U.S.-Mexico border. In January alone, nearly 100 cases were reported within 400 miles of the border, a significant increase from December.
"The mild winter has a lot to do with it," Relph says, explaining that the lack of hard freezes has allowed the parasite to thrive. While screwworms do not affect beef quality, their gruesome impact on livestock could alarm consumers.
Despite these risks, livestock producers are in a strong position to protect their profits. Futures, options and Livestock Risk Protection offer ways to hedge against market volatility. "At least try to protect a portion," Relph says, noting that even a 10% market correction could wipe out profits on high-value animals.
With grilling season approaching and strong demand for beef, farmers have an opportunity to capitalize on current market conditions while safeguarding their income for the future.
Hear more about the livestock market in this week’s episode of Ag Marketing IQ In Depth.