After the cattle market flip of 2015, cattle producers are finding a greater need for price discovery. In speaking at the Cattle Industry Convention, CattleFax Chief Executive Officer Randy Blach said there needs to be more points of price discovery on a weekly basis.
“When we have one point of price discovery at 4:30 on Friday afternoon where we trade cash cattle, that’s not a very efficient way of doing business, is it?” Blach said.
The downturn in the cattle markets were compounded by a large amount of heavy cattle that were backed up in the system in the late summer and early fall. Blach said the market was offering an incentive to packers to ship cattle out of those areas and move them to areas with less inventory. He said when you do that, you end up with a much more limited cash price market in the central and southern Plains and there isn’t any price discovery. At the time, he said 95 percent of the cattle were being sold on a formula or grid and only five percent were selling in the cash market in the central and southern plains and that’s when the industry found its tipping point.
Radio Oklahoma Ag Network Farm Director Ron Hays remembers a time when there were 18,000 to 20,000 head selling weekly in the region. Today, the Texas Cattle Feeders are reporting 1,500 - 2,500 head. That change has been quite dramatic. Things also changed in losing the Cargill packing plant in Friona, Texas. Blach said feeders need access to packing plants. An area like Kansas will probably see more price discovery.
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