Subgroup Releases Q2 Evaluation Of 75% Plan

July 19, 2021

The NCBA Live Cattle Marketing Working Group Regional Triggers Subgroup recently completed its performance evaluation of the 75% Plan for the second quarter of 2021. This is a requirement of the framework developed and approved by NCBA members last summer as a voluntary approach to achieving price discovery in the fed cattle market.  

Using data collected under Livestock Mandatory Reporting and published by the Agricultural Marketing Service at USDA, the subgroup found no minor triggers were tripped in the negotiated trade volume silo during the second quarter. The goal of completing the packer participation silo has proven difficult to achieve, but according to a letter sent to NCBA members by association President Jerry Bohn, the subgroup now has finalized agreements with the four major packers to analyze their participation in the negotiated market from the third quarter onward. The completion of the packer participation silo brings the total number of minor triggers in the plan to eight - one for each of the four cattle feeding regions analyzing negotiated trade volumes and one for each of those regions analyzing negotiated packer procurements.  

“Resolving this critical piece of our voluntary effort will help ensure that both buyers and sellers of live cattle bear mutual responsibility for achieving robust price discovery,” Bohn wrote. 

He commended the level of buy-in among cattle producers to the voluntary framework, highlighting the increased number of cattle being offered on a negotiated basis. The second quarter saw more negotiated market participation, particularly in the Southern Plains, than the first quarter. The same accolades were not given to some of the major packers.  

“Some packers have shown a desire to work alongside us to increase their procurements of negotiated cattle, and we appreciate that they have recognized the importance of price discovery to the entire industry,” Bohn wrote. “That said, NCBA has been frustrated by the apparent lack of urgency demonstrated by some of the largest purchasers of fed cattle. The subgroup believes that completing the packer participation silo will encourage all major meatpackers to be part of the solution to this problem.” 

In the absence of confirmable packer participation data, only the negotiated trade volume silo was evaluated this quarter in accordance with the framework. As a result, no major trigger was tripped during the second quarter, which means, per NCBA policy, the association will not be pursuing legislative or regulatory action at this time.