Cattle prices tumbled to four-month lows this week as large supplies weighed on the market. Prices for cattle plunged under $1.25 per pound on Thursday as cattle producers and traders sold off their holdings. Seasonally, Lent is a period of lower red meat demand, further pressuring prices, which are already down 7.4 percent from their January highs.
Looking forward, a potential pitfall looms for the cattle market if Congress fails to come to agreement before the March 1 deadline regarding automatic government spending cuts. If no deal can be cut in Washington, one impact could be a drastic reduction in USDA meatpacking inspectors.
By law, meatpacking plants cannot operate without a USDA inspector present, making “sequestration” a grave threat to the cattle industry. Producers could be caught with a large supply of cattle that they cannot sell, meatpackers would be forced to shut down, and consumers would likely see limited supplies of beef on grocery shelves.
For now, cattle traders are watching beef demand, grain prices, and the climate in Washington for signs about which way the cattle will run. As of midday Friday, live cattle for delivery in February were worth $1.26 per pound.
Wheat market soggy
Wheat prices were sliced to a seven-month low this week by precipitation in the Great Plains. The Great Plains are America’s major wheat-growing region and have been suffering from severe drought, which has been threatening winter-wheat production. Although recent rains and snows are not enough to break the drought, hopes for better weather caused a sell-off in wheat, dropping prices under $7.30 per bushel on Wednesday. As of midday Friday, prices for March wheat had stabilized at $7.40 per bushel.
Yen’s losses gaining scrutiny
The Japanese Yen has been in a near freefall for the last five months, losing nearly 20 percent of its value. The yen has been under pressure as the Japanese government seeks to boost its exports. A lower-value yen makes Japanese goods cheaper to the rest of the world.