Increasing market uncertainty and volatility, tied mostly to threats and rumors of government intervention, broke cattle prices’ steady climb higher in October. All of them relate to U.S. President Donald Trump’s chatter about the need to lower domestic consumer beef prices, capped so far by this Truth Social post attributed to him October 22: “The Cattle Ranchers, who I love, don’t understand that the only reason they are doing so well, for the first time in decades, is because I put tariffs on cattle coming into the United States, including a 50% tariff on Brazil. If it weren’t for me, they would be doing just as they’ve done for the past 20 years — Terrible!”

Wow.

“The current high cattle and beef prices developed over several years and at a high cost,” explains Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his late-October market comments. “Producers have been subjected to detrimental physical, emotional and financial tolls that affect operations for years. Cattle ranchers were forced to sell productive breeding animals prematurely, with most going to slaughter. Producers attempting to manage through the drought incurred increased production costs, including record high prices for hay – only to be finally forced to sell animals in many instances. 

“Physical recovery of ranges/pastures and the financial recovery of ranches is a slow process. Producers are now enjoying high cattle prices and record returns per head, but low inventories mean that cattle ranches are selling fewer animals and still face high overhead costs to maintain pastures, fences, equipment and production facilities. High cattle prices for a period of time are necessary to allow cattle ranches to recover, rebuild, and prepare for the next cattle cycle.”

Additive uncertainty

First there were rumors the government was going to provide economic incentives to producers who retained more heifers. These rumors have proven unfounded so far.

Then the President announced his intention for the United States to import more beef from Argentina. Never mind that there was no mention about what would encourage U.S. processors to import more from that nation or the fact that Argentina’s beef supply means increased exports to the United States — lean trim used to help satisfy ground beef demand — could have little impact, if any.

“The National Cattlemen’s Beef Association (NCBA) and its members cannot stand behind the President while he undercuts the future of family farmers and ranchers by importing Argentinian beef in an attempt to influence prices,” says NCBA CEO Colin Woodall. “It is imperative that President Trump and Secretary of Agriculture Brooke Rollins let the cattle markets work.”

The United States already faces a deep trade imbalance with Argentina, according to NCBA. During the past five years, Argentina has shipped beef valued at more than $800 million to the U.S., while purchasing only $7 million of U.S. beef. Plus, Argentina has a long history of foot-and-mouth disease (FMD), and USDA has not completed the necessary steps to ensure Argentina can guarantee the safety of the products being shipped here, further endangering America’s cattle herd.

“If President Trump is truly an ally of America’s cattle producers, we call on him to abandon this effort to manipulate markets and focus instead on the promised New World screwworm (NWS) facilities in Texas; making additional investments that protect the domestic cattle herd from foreign animal diseases such as FMD; and addressing regulatory burdens, such as delisting of the gray wolf and addressing the scourge of black vultures,” Woodall says.

Similarly, Andrew P. Griffith, agricultural economist at the University of Tennessee explains, in his late October market comments, “There are certainly policy changes that can be made to support an increase in domestic beef production. However, none of those policy changes will result in a short-run change to beef and cattle prices. From an international trade standpoint, policy can be changed to reduce the barriers to importing more beef, but nearly all of that beef will be lean grinding beef, which means ground beef products. Thus, it may marginally result in a decrease in the cost of [ground] beef, but consumers will not know the difference. Increasing imports is not going to change the price of high-valued cuts such as steaks or other muscle cuts.”

All the while, wonderments continued about when the U.S. would resume importing feeder cattle from Mexico. Absence of those cattle for almost a year, due to NWS in Mexico, helped underpin cash calf and feeder cattle prices, which led Cattle futures higher and higher.

Next came the USDA Plan to Fortify the American Beef industry: Strengthening Ranches, Rebuilding Capacity and Lowering Costs for Consumers. Strategies include expanded grazing on federal lands; more timely response to livestock predation; increased affordability of USDA risk protection tools; enforcement of “Product of USA,” label claims; lots of other initiatives and lots more meetings. 

Bottom line, the thickening cloud of uncertainty — including the lack of market data, due to the lingering government shutdown — quashed willingness to take risk in the market. Spot Oct. Feeder Cattle futures sank $18.65 the week of October 20. During the same time, the CME Feeder Cattle Index declined more than $9.00/cwt.

Fundamentals remain strong

Limited cattle supplies and beef production, in tandem with robust domestic consumer beef demand continue to provide price support. Left alone, these same fundamentals and the lack of herd rebuilding suggest strong cattle prices for at least a couple more years.