The cattle market weakened slightly during February, particularly in the final week of the month. Choice fed steers in the Amarillo area remained in a tight $60-62/cwt. price range until the last few days and then fell to the $59-60/cwt. level.
Feeder cattle and calves also remained fairly steady throughout February but did not demonstrate as much month-end weakness as feds. This allowed prices to remain significantly above year-earlier levels.
Oprah Comments It seems obvious that we're now in an age of "the truth doesn't really matter." You can say almost anything, regardless of its impact on others. You're protected by the Constitution's right to free speech. If you have any doubts and want to make it 100% safe, all you have to do is say - "in my opinion." So with that disclaimer, here are my reactions to the Oprah Winfrey case.
The BSE (bovine spongiform encepthalopathy) issue was already news in early 1996. Misleading information abounded, causing a somewhat shaky cattle market. Beef has been under attack by the anti-meat fanatics ever since the early 1920s, so this was just another negative episode.
Then, on her April 16, 1996, show, Oprah allowed some false and irresponsible statements to be made by a guest vegetarian on the program. She managed, however, to have some counter-statements by a USDA representative that were edited out of the show.
To further emphasize her point and add a dramatic flair to the show, she promised her viewers never to eat another hamburger. The cattle market reacted violently, dropping prices sharply.
After the Oprah show, cattle prices on the futures market reacted negatively and, as expected, the live-cattle market reflected that drop. That weakness continued in reaction to the aftermath of these TV remarks. Fed Choice cattle in the Amarillo area fell from a weekly average of $62 during the week ending April 5 to $55.58 just three weeks later.
I do have trouble understanding why lawyers for the cattlemen didn't spend more time educating both the judge and the jury about how cattle prices are established.
It's obvious that in the long run supply and demand, including seasonal factors, are the major price determining factors. In the short run, however, prices are dominated by changes in the commodity futures market. It's in this arena that such shock statements could be most disastrous. And they were. There could have been a long lineup of professional livestock analysts called on to explain this situation.
It was also surprising that the cattlemens' associations decided not to legally react to the attack. Instead, they suggested writing letters and complaining to the show's producers. In my opinion, it was their duty as representatives of the entire cattle business to interact and defend them. Certainly it would have looked better in court to have more of the industry involved than to have only a couple of feedlots complaining about the impact on prices.
During the trial, the judge ruled that the jury would not decide the case under the Texas Perishable Food Law. If my information is correct, the reason for this decision was because the show's statements were not "intended" to be detrimental to the industry. I guess when a "superstar" says she will no longer eat a food because it's dangerous, that's not meant to intentionally harm the industry?
Also, since the accused in this case was one of the most famous and influential TV personalities in the nation, the prosecution should have used comparable professionals to present their case. They could have used their own "superstars" - there are plenty in the cattle business.
Maybe next time we'll do better when another "health food expert" from Hollywood gets on TV and tells how beef is bad for your eyes.
The Inventory As reported last month, the U.S. cattle and calf inventory for Jan. 1, 1998, showed 99.5 million head on farms and ranches. That represented about 2% less than a year ago. The important statistic was the number of beef cows in the U.S. at 33.7 million head. That level was also down about 2% from last year.
The bulk of beef cows were located in the southern Great Plains states. Texas led the nation with 5.5 million head; followed by Missouri with almost 2 million head. A total of six states - Texas, Missouri, Nebraska, Oklahoma, South Dakota and Kansas - accounted for43% of all the beef cows in the nation.
Cattle Feeding Cattle and calves on feed in U.S. feedlots with capacities of 1,000 head or more was 10.8 million head on Feb. 1, 1998. This was up 4% from a year ago but down 3% from the January level. The largest gain was recorded in Texas with 8% more than a year ago. Other states with healthy increases were Nebraska, Colorado and Washington.
Fed cattle marketed during January were 2 million head, down 1% below 1997. While several states reported increases in marketings, Texas led with an 8% gain.
Placements of cattle and calves into feedlots during January were 1.7 million head, 9% lower than a year ago. Five states, however, did record larger placements, the foremost among these was Idaho and Texas.
The number of cattle and calves placed on feed by weight groups was lower for each class except the 700- to 799-lb. group. Particularly reduced was the lightest weight group - the under 600-lb. calves - which were down 22% from year-ago levels.
Relative to total placements, the lightest calves and the heaviest feeders recorded the smallest proportion. The middleweight groups moved up to a more prominent position and accounted for almost 21/43 of those placed on feed.
The Market While fed-cattle marketing levels were up substantially from a month earlier in January, the fed-cattle market held it's own. In contrast, feedlot marketing equations suggest a little larger output for February. Estimates for March and April are projecting a substantial drop in marketings. This should allow improvement in fed-cattle prices, particularly as we move into the spring months. Fed-cattle supplies could become quite short by then, reflecting reduced placement levels from the final months of last year.
The smaller calf crop recorded during 1996 and 1997 is finally paying off. Feeder cattle and calf supplies outside of feedlots on Jan. 1, 1998, were down 4%. As a point of reference, year-ago supplies were down only 3% - and look at the great year ranchers had last year.
The availability of lighter weight calves, those 500 lbs. and under, recorded the largest percentage decline in number. Heavier steers and heifers (over 500 lbs.) were also lower but considerably less.
This combined situation should allow feeder prices to move up strongly during the spring months. With a lesser reduction in heavier feeders, prices on them may not strengthen as much as the lighter calves.