Source: John Michael Riley, Asst. Extension Professor, Department of Agricultural Economics, Mississippi State University
The news of a fourth confirmed U.S. case of Bovine Spongiform Encephalopathy (BSE) has, for the most part, been digested by the market place. Exports appear to be shored up with Indonesia, a minor beef buyer, the only country choosing to suspend imports of U.S. beef. The latest export data through April 26, 2012 show a slight increase in total weekly sales compared to the previous week, 16,800 metric tons versus 15,500, but still below the rolling four week average of weekly export sales, 18,230. When compared to year ago levels, 2012 exports are 4.5% above 2011 with accumulated sales of beef at 359,800 metric tons versus 344,200 over the same time period in 2011.
Domestically, any harm to beef demand appears to be in the rear view mirror as a result of lean, finely textured beef (LFTB), with the recent BSE case is showing no noticeable signs of a negative response. Collectively, these events speak volumes to information flow and preparation. In a large part, the rapid wave of negativity that LFTB brought about came via social media. To quote Dr. Tonsor from a few weeks ago in this newsletter, “the public is fully in its right to influence how food is produced.” More often in this social media driven environment that our markets operate in consumers are becoming better aware of these issues. They are able to share their opinions in a very public arena that filters through the population rapidly. This fast paced flow has created a market that seems to stay on edge, teetering one way or the other depending on whatever the newest tidbit of information may be.
Further, as we have seen with these two events, the response by an industry must come with the same speed and carry the weight of facts and objectivity. With respect to the BSE case, this was a road both the industry and government had been down before. All parties had a working knowledge of what to expect and calculated methods to assure the public that safety was maintained. On the other hand, the LFTB issue was one that caught everyone off guard. The response was not as ready and the message not as clear or concise. This lag was very short lived but the for all intents and purposes the short-term damage had been done. Although no one can predict the next LFTB, the lesson once again shown that this industry, much like that of many agricultural industries, will never be able to rest on its laurels.
Cattle markets were down last week. Fed steer prices were down about 2% from the previous week. Feeder cattle were also lower on the week as the Oklahoma markets were down about $1/cwt. Calf prices were mixed. Cash corn in Omaha was steady on the week at $6.31/bu. Boxed beef prices experienced a second week of improvement after falling more than $20/cwt. from early March to mid April. Live cattle futures were jilted by the news of the fourth U.S. BSE case, but experienced a modest recovery in the days that followed.