However, this rise in beef cow slaughter was partially driven by other factors other than the Holcomb fire. The Holcomb fire has surely impacted some producers decision to remain in the business. Since the week of September 14 th, 2019, beef cow slaughter numbers are on an upward trend and do not show any signs of slowing down. Beef cow slaughter numbers closely tracked 2018 numbers for most of 2019 even during the fire incidence (week 32 to week 37). The Oct 2019 feeder futures contract initially dropped from $140.00 to $130.00 per cwt., settled at $135.00 over the next few weeks before sliding back down to $130.00 the week of September 14 th (the 37 th week of the year). The Holcomb fire occurred on (the 32 nd week of the year). Approximately 28% of the increase in beef cow slaughter came from regions with include NE, TX, and KS, 32% from ID, OR, and WA, and 16% from the South East. There is clear up tick between beef cow slaughter in 20 beginning in week 37 and well above the 3-year average. This report suggests that there is a large beef cow sell off occurring since the week of September 14 th (see Figure 1 panel a) with significant regional differences (see Figure 1 panel b). Before this release, the weekly USDA-AMS Cow Slaughter Under Federal Inspection ( Cow Slaughter) report can provide the direction of cow-calf producer response. The Cattle Inventory Report in January 2020 will officially detail the number of bred beef cows and heifers held for breeding herd replacement this fall ( USDA Cattle Inventory). Their response to these events ultimately determines the availability of feeder cattle in the coming years. Given this market volatility, cow calf producers could respond by either 1) selling cows and exiting the market or 2) retaining beef cows for breeding. Depending upon how risk averse producers were likely determined price risk management used and ultimately gross revenue received for sold calves. Prices did recover and the Oct 2019 futures contract finished near $145 per cwt. in June, July, and August before the Holcomb fire dropped prices to $127 per cwt. Markets bounced between $145 and $132 per cwt. Poor planting conditions caused a run up on corn prices dropping demand for feeder cattle prices to $147 per cwt. At calving, Oct 2019 feeder cattle futures prices were $157 per cwt. To illustrate the market uncertainty cow-calf producers were making decisions in this past year, let’s take a representative Northern Plains cow-calf producer who calves in Mar or Apr and then sells weaned calves in Oct. Responses between these groups will be fundamentally different since packers and feedlots operate off margins whereas cow-calf operations rely on market price levels where profitability is largely driven by controlling costs ( Bowman, Pendell, and Herbel 2019). Little has focused on how cow-calf producers have responded due to this event and resulting feeder futures market volatility. But to date, most of the cattle market commentary has focused on packing plant and feedlot responses. These dramatic effects have ranged from massive selloffs in the futures market, record packer profit margins coupled with increases in Saturday harvest numbers, and volatile feeder and fed cattle prices. The Holcomb packing plant fire has certainly been a black swan event – rare, unpredictable and has had dramatic effects on the cattle industry. This article was first published by In the Cattle Markets
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