Spring cattle market doldrums

The bloom was off the rose in cattle markets this past week, both feeder and fed. As winter recedes and spring grasses start to turn green, the realities of cattle prices, ranch inputs and domestic beef demand come home to roost.

It might be happening a week or two early this year, spurred on by $5 corn, the spector of $4 gasoline and consumers buying less beef because pork and chicken are currently cheaper in the grocery meat case. They're buying $3-$4 gasoline too, and cutting back on grocery spending to cover the added cost. Negative media coverage and presidential campaign buzz to make things look as bleak as possible, are spilling over into consumer perceptions. Many really aren't personally affected by the housing crash, subprime mortgage crisis and higher unemployment.

Afterall, if you have a well-paying, stable job and own your home on a low interest, fixed mortgage with plenty of equity in it, which is the case with most Americans, all these overblown "crises" really don't affect you. But most people button their pocketbook anyway, expecting a rainy day right around the corner. That's what's happened to consumer beef demand.

This gloom was reflected this past week in cattle markets, as feeder cattle were $4-$6 lower and fed cattle out of the feedlot were $2-$4, mostly $3, lower. Markets have held up admirably so far this year, given the glut of negative news and market prognosticators forecasting lower prices that until this week, never happened. But finally, boxed beef demand retreated at the wholesale level, and packer operating margins sunk into the red. It was only natural they would pay less for fed cattle.

At the local feeder cattle auctions, spring graziers had begun to pencil in the cost of cattle, the cost of inputs, how much grass they really would have, and what the cattle will likely sell for off grass next fall, and decided to pay less for feeder cattle or not buy them.

Only the rookies were in panic, for veteran cattlemen have been through all this many times before--and certainly, much worse downturns than this one. It's just that annual time we always face, when reality sinks in.