U.S. Ag Secretary Sonny Perdue announced yesterday that the agency would be expanding its investigation into the cattle markets. This announcement came after NCBA President Marty Smith sent a letter to President Donald Trump requesting the government act quickly to investigate the striking disparity between boxed beef prices and cattle prices in the futures and cash markets. He specifically asked President Trump to direct USDA to expand the ongoing investigation into market activity after the Holcomb fire last August to include the current market volatility taking place in the wake of the coronavirus pandemic. Smith wrote that the investigation request was being made “in the hope of identifying whether inappropriate influence occurred in the markets, and to provide our industry with recommendations on how we can update cattle markets to ensure they are equipped to function within today’s market realities.”
Additionally, Smith asked that the Commodity Futures Trading Commission study the influence of speculators on live and feeder cattle futures contracts to determine whether these contracts remain a useful risk-management tool for cattle producers. He also pointed out the importance of keeping the beef supply chain moving during this time of volatility and instability.
“The market woes for cattle producers will only grow if packing plants shut down or slow down for an extended period,” Smith stated. “As cattle producers, we are the beginning of the beef supply chain and we need continued vigilance and oversight of all cattle market participants – for the benefit of America’s cattle producers and all Americans.”
KLA President Harry Moser sent a similar letter last week to USDA Under Secretary Greg Ibach requesting an investigation to determine if any violations of the Packers and Stockyards Act occurred following the first diagnosis of coronavirus in the U.S. January 21. Both the KLA and NCBA letters can be found here.