Friday, May 13, 2016

Gaining Confidence in Feeder Cattle Prices

As we all know, the cattle markets have been extremely volatile lately. There are several factors that play a key role in keeping our cattle industry markets representative. One of those factors is the Feeder Cattle Index and unfortunately, it is overlooked all too often.

The Feeder Cattle Index is a system that utilizes the USDA Agriculture Marketing Service (USDA-AMS) Feeder Cattle Reports to create an index that provides investors with a reliable and publicly available benchmark for investment performance in the feeder cattle market.

The reliability of the Feeder Cattle Index depends on voluntary price reporting from feeder cattle sales. However, more feeder cattle prices are reported in the south than in the north. This issue causes farmers in the north to have an inaccurate price portrayal of what they are producing on their farms. Here in Iowa, a large percentage of our cow-calf operations are suffering from these misrepresentations, and may not be getting a fair price for the feeder cattle they are selling. Additionally feedlot operators lot projections are not truly accurate.

 “Our goal is to try to have a feeder cattle index price that more accurately represents what feeder cattle are worth in the North, so that it’s not weighted so heavily for the South,”stated Brad Kooima, a cattle producer and commodities broker from Sioux Center. Kooima stresses that voluntary feeder cattle price reporting will help both cow-calf producers as well as feedlot producers, and may lead to a more reliable feeder cattle futures market, as well.

In an effort to educate cattle producers on the importance and logistics of voluntary feeder cattle price reporting, the Iowa Cattlemen’s Association has invited USDA representatives to the Northwest Regional BeefMeet in Spencer on June 22, the Northeast Regional BeefMeet in Independence on June 23 and the Southwest Regional BeefMeet in Atlantic on June 28. ICA will also be publishing a feeder cattle index fact sheet in the coming weeks.

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