How many head of cattle were lost in the wildfires in Texas, Arkansas, Oklahoma and Kansas is yet to be determined, but cattle producers in the Ozarks shouldn’t expect to see an upswing in the markets due to the losses.
Dr. Scott Brown, assistant University of Missouri professor of agriculture and applied economics, told Ozarks Farm & Neighbor that the loss of cattle, while crippling to those producers impacted by the fires will not be great enough to impact markets.
“As devastating as it is in those areas that lost cattle, I don’t expect a lot of market affects,” he explained. “There’s just not a big enough cut in the national numbers. If you were one of those producers who lost everything in the fires, it is a horrendous hit, but I just don’t expect much of a market lift as a result of this.”
He added that the catastrophic blizzard in 2013 in South Dakota killed tens of thousand cattle, but the actual loss was much smaller than projected.
“This maybe a similar event,” Brown said. “They are very tragic stories, but there might not be a great enough volume of cattle lost to have a blip on what is otherwise great number of cattle.”
Cattle inventory reports from the U.S. Department of Agriculture occur twice a year and the second count is expected on July 21. Brown said that will be the first potential state-by-state look at cattle inventories since the fires, however federal budgetary issues forced the USDA to forego the July 2016 report, and Brown said the new report could be canceled for similar reasons.
While the report remains only a possibility, Brown said payments by the USDA through programs, such as the Livestock Loss Indemnity program, should give a clearer picture on losses prior to the July report.
While the wildfires may not cause an upswing in cattle markets, issues with Brazilian beef are expected to make prices increase in the U.S.
Brazilian federal police raided several meat processing plants and arrested more than two dozen people in March after a corruption probe in that country that involves allegations government inspectors allowed rotten and salmonella-tainted meat products to be sold in exchange for bribes. The probe also involves the poultry market. According to the USDA, none of the slaughter or processing facilities implicated in the scandal shipped products to the U.S., but the department said it still was conducting “additional pathogen testing of all shipments of raw beef and ready-to-eat products from Brazil.”
While the U.S. has not halted beef exports from the South American country, many others have closed their boarders.
On average in March, Brazil exported more than $60 million worth of meat each day. That figure dropped to $74,000 days after investigators revealed the probe.
Two Brazilian companies at the center of the investigation are JBS and BRF.
“That’s the market lift we are looking for,” Brown said, adding that 32 of 36 plants owned by JBS in Brazil were temporally shut down recently because of the scandal.
Brown added that the outcome of the inspection issue isn’t known at this time, but the news seems to be “getting worse” for Brazil.
“That can open a real opportunity, especially when you look at our other competitors,” he said. “I look at Australia first because they already have record prices because of their own drought and they likely can’t fill the whole left by Brazil being out. I would have said Brazil was going to export 2 million metric tons of beef this year, but I doubt that will happen if the markets remain closed.”
Markets overall for 2017, Brown said, will not see the record prices of 2014 and 2015, but there isn’t expected to be a large downturn.
“Demand for beef, both exports and domestic, is stronger than many of us ever thought when we started the year, so maybe there is going to be a little less on the downside,” he said. “Maybe we are seeing some signs and that is phenomenal when you think that we are going to push another 3 percent on the beef market in 2017. I have become a little more bullish than I was at the start of 2017 because the demand side looks better. It won’t be 2014, 2015, but I think we are going to see some higher prices in 2017, and when we sell those feeder cattle, maybe we will see a little better prices than we did in 2016.”
