Nobody knows the actual impact the cowardly terrorism and unspeakable tragedy of Sept. 11 will ultimately have on the economy overall. If history is any indication, though, the chaos wrought shouldn't have much impact on the cattle markets.

For perspective, the folks at Cattle-Fax took a look at the market on both sides of national upheavals during the past 50 years. These included historic incidents like the Korean War, the Cuban Missile Crisis, JFK's assassination, the Gulf War and the Oklahoma City bombing.

“Over the longer term, it's hard to see any impact on prices from these events,” says David Weaber, Cattle-Fax marketing analyst. “Most of the fluctuation can be explained by the normal cyclical forces going on in the business.”

As an example, the average Omaha fed steer price in 1995 was $66.57/cwt. That's the year Oklahoma City was bombed. In 1996 the average price fell to $65.00/cwt., but Weaber points out 200 million more lbs. of beef that year explains virtually all the price differential.

Likewise, when average fed prices jumped $5/cwt. the year after the Korean War began and $1/cwt. the year after the Gulf War started, cyclical forces explain them.

In sum, Ron Plain, University of Missouri Extension livestock marketing specialist, says, “Our prediction is that we'll look back a decade from now and not notice anything significant about agricultural prices.”

Feds Were Poised To Fall

No one is disputing that live cattle futures broke when the Chicago Mercantile Exchange opened up a few days after the attacks on New York City and Washington, D.C. The live fed market soon followed.

But Weaber points out, “The basis was abnormally wide (creating a false premium in the futures market), and it was going to collapse some anyway because of the large cattle placements we had in June and July.”

He says the events in September might have made it happen quicker and deeper because of doubts about the economy and concerns about the stock market melting down.

“Getting this basis premium out of the market should help us clean up the cattle on feed numbers we have staring at us because there's no incentive to hold them any longer,” Weaber says.

As well, Plain says retail price series released just before the attacks served up the third largest month-to-month decline in a decade. This led some to worry about erosion in escalating beef demand.

Don McCasland, who owns Wheeler Feedyard in Wheeler, TX, has seen more red ink over less noteworthy events.

“The dairy herd buyout in 1985 was a tough market. It broke more like $15. I remember a truck strike in New York that broke the market by about $10. And, of course, the wreck of 1974 is always on our minds.

“That's why I buy puts on every pen fed in this yard,” explains the cattle business lifer who has personally managed his own and clients' risk for decades.

Considering what's happened, McCasland feels the good fortune may be that things haven't broken harder than they have. In round numbers he explains live cattle futures tumbled about $6 in the aftermath, but he agrees much of it has to do with cattle inventory and the wonder about demand.

“I don't think anyone needs to jump ship. Just hang on, be a good marketer and get the cattle marketed,” McCasland says.

Fundamentals Are Still Strong

Yes, the global and U.S. economies were already faltering. Yes, increasing strength in the dollar against foreign currency has pressured exports this year. But, Weaber points out, there is still no cowherd expansion occurring. That means tight numbers will continue to buoy calf prices. Plus, even though calf prices are taking a seasonal dip, the availability of wheat pasture has kept lightweight calves at a premium.

Moreover, though there are concerns about what recent events spell for demand, beef has been on an upward demand climb for 10 of the past 12 quarters.

Even more hopeful, at press time, McCasland said he believed cattle futures had finally found the bottom.

“When the market breaks hard and it hits bottom, you'll see a rebound of about 50 percent of the break. Then you have to work hard to get the rest of it,” he explains. “University studies have taught us when a market breaks it will take about four times as long to recover the ground that was lost.”

And, Weaber stresses, every market offers opportunity. “In these bull market years, if a cow/calf producer can retain ownership in any form, it's the time that these kinds of programs usually do the best,” he says.

For feeders, McCasland says, “When the market breaks, there are always a lot of doomsday philosophers. Let's not forget the gains we've made in demand. I think if the industry just keeps its cool and doesn't back cattle up, when the economy gets moving again, the market will come back.”

And, let's not ever forget the unspeakable losses of Sept. 11. Keep the lost and their families in your prayers, along with the nation and its leaders. Keep America strong!