After 40 plus years in the business Joe Vetter of Herreid Livestock Auction in South Dakota says he can't remember a cattle market ever breaking so hard.
“Back in the dairy buyout days we saw a dramatic drop but we had never been to a height like we've been,” Vetter says. “And to lose 60% of our market in the feeder cattle is very unprecedented.”
Wall, S.D. cattle producer Myron Williams says the price drop was also fast.
“Especially when you see what happened in 2014 when we got $1,700 for calves, now we're getting $700-$750. A $1000 a head difference in two years is a lot. You know a small farmer with 100-120 calves you know that's a $100,000, that's a big bite,” Williams says.
That's leaving the industry trying to pinpoint the reason.
Keith Eichler, owner of Eichler Livestock Marketing in Aberdeen, S.D. blames a broken futures market, the strong dollar and increased imports.
“It’s not so much about the increase in numbers in the United States as much as the increase of numbers coming into the United States,” Eichler says.
The imports discussion has been a hot topic among cattle producers after beef trade with Brazil was reopened. However, data indicates there has been a significant drop in tonnage coming from out of the country. According to Sterling Marketing, imports are down 10-12% in 2016.
Overall meat production is up across the United States’ livestock industry, says John Nalivika, president of Sterling Marketing
Williams agrees that the market is seeing, “Too many hogs, too many chickens, too much protein, cattle are bigger.”
Cattle prices have fallen farther and faster than anyone anticipated and the fear is that that is already putting some cattle producers out of business.
“We are losing them already. The producer that's raising the cow calf those operators are going to be effected this year, this season,” Eichler says.
Cattle producer Chad Berger from Herreid, S.D. says feedlot operators have seen even more red ink.
“And these guys feeding the cattle have been losing $300, $400 or $500 a head feeding and I think we're going to lose a lot of our smaller farmer feeders because they've lost millions of dollars in the last two years,” Berger says.
And that will trickle down to Main Street.
“From your gas station to your drug store to your lumber yard to all of them, you know are going to take a hard hit,” says Scott Vance, owner of Faith Livestock Auction in South Dakota.
Continuing Cattle Woes