U.S. economy driving cattle prices down

The U.S. financial collapse has overridden the fundamental soundness of the economics of the beef industry, leading to lower wholesale beef prices, lower cattle futures, and ultimately, lower cash cattle prices at both the feedlot and the sale barn.

Cattle numbers are well under control, and feedlots are very current. Despite the tough general economy, retail beef demand has stayed strong, and packers are able to sell all the beef they produce. U.S. beef exports continue to do well. Corn prices are down, as well as hay and other feed costs for the winter.

By all the normal indicators, it ought to be a great year for cattle prices and profits.

It's not turning out that way, and at the bottom of the pile is the cattle futures market.

It is a speculative crap shoot at best, and in an economy like this one, cattle futures just follow the Stock Market, which is down, down, down. I'm sure you're as impressed as I am at how the election of Barack Obama has straightened out the stock market, stabilized the economy, and brought the troops home from Iraq. Talk about instant action.

Just think how bad things would have been if John McCain had won.

That said, the cattle futures trade at the Chicago Mercantile Exchange is out of the control of cattlemen or other segments of the industry. As close as any cattle-connected people can come is the Big 3 packers and a few huge cattle feeders in the Texas-Oklahoma Panhandle. While they have on occasion combined to drive the futures up or down, even these power brokers in the cattle business are helpless right now.

In short, the ordinary cattleman is not immune to the worst economic crisis in our lifetime. We have our houses in order, but events beyond our control are swinging the dog. About the best cattlemen can do is hunker down, and weather the storm with everyone else.

It isn't just, but it's what is.