Nothing has changed in the cattle market, but outside fundamental factors have taken prices lower in recent weeks. That’s according to Oklahoma State University Extension Livestock Marketing Specialist Derrell Peel. There are lots of outside influences, like the stock market.
“Markets run off greed, fear and ego and at any one time, sometimes one of those emotions is more important than other,” Peel said. “Fear has been the name of the game the last couple of weeks.”
The downward trend in the U.S. stock market has been influenced by global events. Peel said the fear has been led by China, which has caused a great amount of uncertainty in the market. He said it will take some time for the markets to sort out this situation. With cattle prices remaining higher than historical levels, he said producers are sensitive to changes in the markets.
“The market is vulnerable to some extent,” Peel said. “I think certainly in terms of the cash market, we probably over shot the market and the futures as well, in terms of the cattle market specifically. But it’s all going to be related to how this stock market thing plays out the next few days, weeks.”
U.S. beef does not direct market into access into China, but sales to the entire Asian Pacific region are very important to the U.S. cattle market. The strength of the U.S. dollar this year has not helped U.S. beef exports. In looking at the broader picture, Peel said demand is a larger factor in the situation. The Chinese economy will continue to grow, but probably not at the rates that were forecast.
“The market’s kind of coming to grips with that and digesting all of that reality here,” Peel said. “It’s going to a little time for it to sort out.”
Peel said the U.S. cattle industry needs to continue to focus on getting market access into China. With 1.4 billion people, any access to the market will increase demand for U.S beef.
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