CHECK THIS OUT on KOAA.com meat packing problems!

https://www.koaa.com/news/coronavirus/meatpacking-problems-drive-down-cattle-prices?fbclid=IwAR0KnxzvUkNTGpypbfJ5z4YN1lY3XuTu5D12sKQADNv70tO3R4JX6V5YPZI

JACE'S NOTES

JACE'S NOTES

Thought this might be helpful.  It is provided by LMA which is Livestock Marketing Association which provides our cattle insurance here at La Junta Livestock and lobbies for the cattle industry, sale barns and producers.  

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LMA Hard at Work on Investigation and Fed Cattle Pricing Concerns

On Saturday, the LMA Board of Directors, Government and Industry Affairs committee, and Membership Services committee had a call to discuss ongoing concerns in the cattle industry. Discussion included:
•    LMA supports the ongoing efforts by livestock organizations and individuals to bring about a pricing mechanism that would better serve the cattle feeder, and thereby the cattle producer. We encourage LMA members to support those initiatives that they believe have merit, and to help in any way they feel comfortable with.
•    There was a strong consensus from this meeting that the role of the Livestock Marketing Association in this situation is to strongly advocate for, and assist where possible, the investigations by U.S. Department of Agriculture and the Department of Justice into the pricing differential between the wholesale price of beef and the price that cattle feeders are receiving for their cattle.
LMA is conducting thorough research of antitrust and fair practices laws, as well as past lawsuits. The intent of this research, along with additional discussions, is to pinpoint areas of concern within the process of price discovery between meat packers and cattle feeders. The LMA will advocate to the U.S. Department of Agriculture, the Department of Justice, the Commodity Futures Trading Commission, and other agencies, to include these specific areas of concern in their investigations.
 
The LMA will also work in cooperation with Congress and other livestock organizations to bring about a thorough and meaningful investigation into the pricing mechanisms involved.
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Details Emerging on USDA COVID-19 Aid

Late last Friday, USDA announced a $19 billion program that combines $16 billion of direct payments to producers and $3 billion in commodity purchases for distribution through food banks and faith-based organizations.
                                                                      
This includes $9.6 billion in direct payments will go to livestock producers — $5.1 billion to beef cattle, $2.9 billion to dairy farmers, and $1.6 billion to hog producers.
 
According to a release from Senator Hoeven of North Dakota, producers will receive a single payment based on calculations of losses in two periods:
85% of losses from January 1 to April 15
30% of the losses from April 15 to September 30
While the aid is appreciated, it will fall short of covering all of the price lost due to COVID-19. Additionally, livestock groups are concerned a reported $125,000 cap per commodity for each individual/entity will limit the ability of larger producers to receive meaningful assistance from the program.
 
USDA aims for payments to go out in late May, but further details of the program and sign up are still pending.

JACES NOTES

Here is something that is encouraging for us. LMA which lobbies for us as livestock markets and cattlemen also carries La Junta Livestock’s livestock insurance. The following is an LMA alert sent out today, April 14, 2020.

LMA ALERT

The Livestock Marketing Association (LMA) is encouraged to see Secretary Sonny Perdue’s announcement that the U.S. Department of Agriculture (USDA) will be extending its oversight to determine the causes of divergence between boxed and live beef prices, beginning with the Holcomb, Kansas beef processing plant fire and now incorporating the COVID-19 pandemic. 

LMA calls for the investigation of beef packers to be comprehensive and expeditious. It should consider all potential anticompetitive and oligopolistic issues. This investigation should also include Department of Justice (DOJ) participation.

From the beginning, LMA has supported USDA’s investigation into beef pricing margins, which was opened in August 2019 following a beef processing plant fire. At that time, LMA wrote to USDA encouraging the agency to conduct a thorough investigation of all facets of this issue and underlying forces. LMA urged that if unfair trade practices, price manipulation, collusion, or other violations of the Packers and Stockyards Act or antitrust laws were found, rapid enforcement actions had to follow.

LMA went on to point out that the market volatility following the Holcomb plant fire was “only one illustration of long-standing concerns regarding pricing and competition.” The LMA letter urged USDA’s investigation to analyze issues related to competition in a larger context than the fire, including looking at issues experienced due to lack of competition in the entire live cattle marketing complex.

Unfortunately, less than a year later, we still await the results of the initial investigation and the structural concerns are proving true once again. The cattle market in the wake of COVID-19 has responded similarly to how it did after the Holcomb plant fire. Once federal, state, and local authorities began instituting recommended and mandatory economic shutdowns in early March 2020, the cattle industry experienced a sharp decline in fed cattle and feeder cattle prices. At the same time, boxed beef prices skyrocketed. Consumers spoke volumes as evidenced by empty meat cases and high prices paid because they view our beef as essential for survival in this pandemic. The combination of these factors resulted in significant packer profit margins. All the while, livestock producers continue to receive a shrinking portion of the retail beef dollar paid by the American consumer. Additionally, a dramatically depressed futures market only worsens the pain by removing opportunities to manage price risk. 

LMA is the national trade organization representing more than 75 percent of the regularly selling fixed facility livestock auction markets in the U.S. LMA also represents online and video marketing entities, and professional buyers: livestock dealers and order buyers. Our more than 800 livestock marketing business members each work with hundreds and even thousands of producers to utilize competitive markets to bring them the best prices for their animals. This adds up to hundreds of thousands of cattle producers served by markets.

Our industry needs producers, feeders, markets, and packers. It is critical that each of these sectors have a reasonable opportunity to make a profit during the business cycle, ensuring a healthy and sustainable industry. However, if anti-competitive practices are at play in one segment, it risks pushing participants in other segments out of business. The cattle industry needs answers regarding what is behind the dramatic spread between live cattle and boxed beef prices and if there is any illegal activity involved. LMA believes that coordination between the USDA and DOJ in conducting an investigation is one step closer to market transparency and participant confidence. 

Here’s a few things I think we should start with:

1. People need to understand we are cattlemen not beef producers. It’s two complete different entities.

2. This is a true fact from a costumer, commodities was made to be used as a tool but now it is used as a weapon against us.

3. The USDA has a representative at all livestock markets and publishes all cattle sold where anyone can look up that auction’s market. But fat cattle only publishes an estimated four to ten thousand head a week, when there is an estimated half a million cattle for slaughter. We need to know what every pen of fat cattle brought for that week so we can base pricing off of all cattle sold.

4. Please contact of your state representatives and let them know what is going on in the cattle industry.

5. Four to five years ago when we were selling five hundred pound calves at three dollars a pound that is $1500 a head. The meat in the stores were at the same price they are today. Today we are selling at five hundred pound calf at $800 a head. We need fair trade right here in the good ol USA!

JACE’S NOTES

Happy Easter and Good Friday! I want to bring a few things to your attention as far as the cattle market is concerned. I heard on the radio going to lunch yesterday, dairies are trying to find permits to dispose of milk, but when you go into the grocery store, they limit you to one or two gallons. I can only come up with this solution in my mind – that the dairy industry and the beef industry are both marketed the same way. What I mean by this is, you have the big corporation in the middle and you have the consumers on one side, getting taken advantage of and you have the producers on the other side getting taken advantage of. The big corporation in the middle is taking advantage of both sides and reaping the reward. President Trump keeps saying that he wants fair trade and he is talking about Canada, Mexico, China, etc. What about fair trade in America in agriculture – beef, pork, chicken, grains, dairy, etc.?

On the positive side this is strictly an assumption. Butcher cows were worth 35.00 to 45.00 Wednesday. Today they are worth 50.00 to 55.00. Today at lunch time Trump said the trade between China should greatly benefit farmers, ranchers, & cattlemen. The trade between China & America should start right away. Does this mean they are going to start taking our agriculture products? I hope I’m right. If things don’t change sooner rather than later, economically, we are all in trouble. Prepare for the worst. Hope for the best. Have a good Easter. Things will get better.

P.S. Let’s hope Carol Baskins doesn’t kill the Easter Bunny. Hahaha.

JACES NOTES - 03-27-2020

Oh my! Glad this week is over. What a roller coaster week for us La Junta Livestock and all of the consignors for our 65^th anniversary. I would like to say thanks to all of our buyers and sellers for participating at our Anniversary sale. Talking to you ranchers before and after I know there was a lot of uncertainty of what you thought your cattle might bring. I think the market was better than everybody anticipated. Some of the market being better had to do with timing, and some it had to do with very high quality of cattle throughout the sale.

I would like to thank all of our employees for going above and beyond and helping us get through these times. I would also like to thank all of our buyers and sellers for their patience with having to deal with the social distancing in the barn. For those of you who were not here, this is what the health department told us to do. “If you are not a buyer or seller we ask that you do not come into the barn and for everyone in the barn keep six feet apart.” This will apply to all future sales until this pandemic is over.

Next Wednesday, April 1^st, will be 3 Bridges Land & Cattle Red Angus Bull Sale starting around 12 Noon. Selling 40 nice long yearling red angus bulls. Viewing available of bulls Tuesday. Following the bull sale we will be selling approximately 150 fresh ropers. This will be our 1st Annual Roper Special. We hope to build this as one of the larger horned cattle auctions in America. Following the horned cattle we will sell all of the calves and yearlings.

Saturday, April 4^th, we will be selling 44 yearlings bulls and 38 2yr old bulls for the Fillmore Ranch Bull Sale. Bulls will be here Friday for viewing. Complimentary lunch included on Saturday with social distancing required. With very nice black and red limousine bulls and lim-flex bulls  

Wednesday, April 8^th, Clark’s Saler & Hereford bull sale with an estimate of 500 to 600 head of bred cows.

Wednesday, April 15^th, Back to Grass calf and yearling sale, estimating 2000 to 3000 head. We will keep you informed as far as any consignments, closures, and changes of market status. Feel free to call with any questions.

Prepare for the worst, hope for the best, and we will get through this. Hope to see you there.

JACE’S NOTES

YES WE ARE OPEN, YES THE LA JUNTA LIVESTOCK ANNIVERSARY SALE IS HAPPENNING. 

The government has closed down nonessential businesses.  WE ARE AN ESSENTIAL BUSINESS..  You ranchers and farmers should realize this.  Livestock auctions, ranchers,  cattlemen etc are a huge part of the food chain..  Example we sold an estimated 150 butcher cows and bulls on a small sale yesterday that will be in grocery stores,and fast food restaurants within 7 to 10 days.  THE ONLY WAY I WILL NOT FIGHT TO STAY OPEN IS WHEN THEY CLOSE GROCDERY STORES AND RESTAURANTS TOTALLY.

As far as the market, we have boxed beef that has gone up again to $245.00 and that is $35.00 higher in 4 days.  These figures are record numbers.  What does that mean to us the producers?  It means your butcher cows & bulls are continuously getting higher because of supply and demand.  This means feedlot cattle are being purchased by the packers to fulfill the supply and demand.  That also means that feedlots need to buy calves and yearlings to put back in the feedlot for the next round of fat cattle to be purchased.  All supply and demand markets.

This is strictly my opinion.  For example people complain that the hedge funds are taking advantage of producers on the commodities. My opinion is that this is not necessarily true. Producers that have their cattle hedged sell their cattle & terminate their position, The only ones with enough guts, and money to buy that position back at today’s markets is the hedge funds.  That is why there is such a spread between the cash market of cattle and the futures market. 

What does that mean for Wednesday’s cattle market?  More than likely the stocker cattle and cattle going to grass will bring a decent price for what is happening with the market and our situation in America.  Feeder cattle will probably be cheaper since they are bigger going to the feedlots and the fear of short term with the uncertainty of the market on a day to day basis, not having the opportunity to hedge those cattle.  The stocker cattle have more time and betting on the market getting better before they have to sell. 

As far as to comply with all of the state, federal and local government rules, if you are not a buyer or a seller, please do not attend the auctions until further notice.  This will help us comply and fight to keep the doors open for our cattle industry and the essential part of the food chain. 

La Junta Livestock Auction intends to continue having sales.  We do ask that for the safety of all concerned, please minimize the time you spend at the market and in the sale arena.  Our staff will be available to unload your consignment so that you may return home to minimize exposure risk. You can also contact our office to discuss check delivery or pick up options if you would prefer not to wait for the mail.  If you are feeling ill or have any symptoms of illness, please remain home.  Please continue to check our website and social media for info on all sales and status of any special sale events.

Listed Below is a list of recommendations of things that La Junta Livestock is asking the public to consider.

1.  Our café operation is following state specific guidance which includes offering carry out service only.

2.  We are offering consignors the flexibility in picking up their checks if they cannot wait for the mail, or delivery, or pick up from their vehicle while in parking lot if they feel the need to.  Call the office at 719-384-7781 and we will bring your check to you in the parking lot.

3.  Our instructions to any employee or visitor exhibiting symptoms of illness to remain home.

4.  We are providing ample opportunities for visitors and employees to wash hands following CDC best practice.

5.  We have cleaned and disinfected any commonly used areas. 

6.  Cleaned restrooms more frequently and restock with supplies including soap, paper towels and hand sanitizer.

Everybody is asking what to do, what the crystal ball says, The last few weeks there has not been but very little positive news coming for our cattle industry.  In a nutshell the futures have dropped like a rock, the same as the stock market.  Everybody in politics and media has been in a panic mode.  I understand what they are saying that with our medical system as is, it cannot handle an enormous amount of this illness at one time.

Now for the positive news.  The retail stores cannot keep up with meat production at the current rate.  The news I am getting is that retailers are needing 6 to 8 times more meat products than normal.  With that being said supply and demand makes the market higher with a trickle down effect for the producer.  A few examples that I have heard, without giving any particular names of companies or stores, that one meat retailer sells for a national independent coop of grocery stores usually sells 4 to 6 loads of meat a week has ask for 28 loads to supply their grocery stores this week.  This means that supply is not keeping up with demand.  The retailer and the packing house is making huge profits, but the trickle down effect will go to feedlots and producers eventually.  Boxed beef was up $16.00 Monday afternoon.  That is $2.24 per pound.  Fat cattle Monday asking price was $105.00, sold at $110.00 to $112.00.  Futures today as I write this, was up $4.50 on live cattle, $6.68 on feeder cattle. 

Good news on the nutritional value of beef, with Doctors and media saying that the zinc in red meat will help fight the COVID-19 virus. 

March 25, 2020 will be La Junta Livestock’s 65^th anniversary.  For 65 years we have ask our customers to help us celebrate our anniversary auction.  With these unique situations, the sale will be a normal sale, minus any of the celebrations, no coffee and donuts, no trip to Vegas, no Hospice Auction to minimize human contact for the normal buy and sell. 

We expect 3,000 to 5,000, cattle, market pending.  I am telling all consignors to please consign your cattle Thursday, March 19^th so that we can tell buyers what we anticipate.  If you consigned your cattle, and you decide to keep them for whatever reason, down market, etc, etc, , even though you have consigned them, I am good with that because I am working for you.  Whatever makes you the most money to keep everyone in the business is good for La Junta Livestock and you. 

Things are looking up, keep positive, you are who feeds the world.  Thanks for your understanding and cooperation.