Industry members are calling for better price transparency in cattle markets in the wake of a devastating fire at a Tyson Foods Beef Plant in Holcomb, Kansas. The United States Cattlemen’s Association (USCA) recently sent letters to the U.S. Department of Agriculture (USDA) and the Commodity Futures Trading Commission (CFTC) requesting that each of the agencies bring cattle industry members together to address price concerns.
“In the weeks following the event, U.S. cattle producers have witnessed unprecedented disruption in the cattle marketplace,” the letter stated. “Two separate Cattle Industry Summits would directly address issues related to the Mandatory Price reporting program, Packers & Stockyards Act violations and definitions, and the cattle futures contracts. USCA looks forward to working with both USDA and CFTC to convene cattle industry stakeholders in the months ahead.”
The letters were addressed to both Secretary of Agriculture Sonny Perdue and CFTC Chairman Heath P. Tarbert. The hope is to bring industry members together in order to facilitate a discussion on how to improve price transparency as well as true price discovery. Secretary Perdue appears to be in agreement that the issue calls for investigation, noting last week that USDA’s Packers and Stockyards Division would be looking into cattle prices.
Secretary Perdue said the agency would be launching “an investigation into recent beef pricing margins to determine if there is any evidence of price manipulation, collusion, restrictions of competition or other unfair practices. If any unfair practices are detected, we will take quick enforcement action.”
Following the August 9 fire at the Tyson Foods facility, there has been quite a bit of movement in the market. Feeder cattle, as well as fed cattle prices, saw a significant decrease while wholesale prices experienced a substantial increase. Some reports indicated that feedlot cattle trades were as much as $6 per hundredweight lower immediately following the fire. The partially destroyed facility is responsible for approximately five percent of all daily slaughter in the U.S.