All eyes on market reaction as US cattle data starts to flow

All eyes on market reaction as US cattle data starts to flow


Beef
US BEEF AFFAIRS: A rancher in Texas watches over his herd.

US BEEF AFFAIRS: A rancher in Texas watches over his herd.

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US govt shutdown effects on beef industry could be substantial.

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THE risk of market overreaction following a stagnation in decision making on the part of beef exporters and importers may prove the most significant fallout for the industry from the United States government shutdown.

The US Department of Agriculture is back on deck following what has been the longest running shutdown in the country, fuelled by its president’s refusal to back down on a request for funding to build the proposed Mexican border wall.

The lack of funding flowing to government agencies as a result of the political stalemate prevents business as usual and in this case left more than 800,000 US government workers without pay.

USDA actual slaughter, carcass weights and weekly production reports, along with its key World Agricultural Supply and Demand Estimates report, have been on hold, in some cases for six weeks.

The January annual cattle inventory has also been delayed but analysts are expecting updated information to start flowing from next week.

Analyst and meat broker Simon Quilty, Victoria, said meat operators had been flying blind without important data and there had been little ability to understand what was happening in US beef and pork markets.

“We’ve had no way, for example, of knowing whether the high number of shipments of exports out of the US into places like Japan and Korea have been sustained,” he explained.

“Has any pork gone from the US into China? We have no clear idea of the impacts of African Swine Fever.

“The ability to manage risk in terms of live cattle futures and hog futures has been affected and as such decision making has been postponed.”

Another key impact has been that exports to the US out of certain countries which require renewed permits have not been able to proceed.

Analysts said there could be large volumes of exports sitting in respective countries waiting to move and that could lead to downward pressure on markets at a later stage.

The USDA has now announced plans to temporarily reopen about half its Farm Service Agency offices in order to assist in processing farm payments and federal farm loans, according to Meat and Livestock Australia.

The lack of reporting makes understanding the current US supply dynamics extremely difficult for industry to gauge, MLA analysts said.

Mecardo’s Andrew Whitelaw’s report on the shutdown says while many commentators disparage the use of the USDA data, the market clearly reacts strongly to their releases.

That reaction had increased during the past two decades, he said.

The question, according to Mr Whitelaw, is after such a long delay, will the market overreact to any new data.

The story All eyes on market reaction as US cattle data starts to flow first appeared on Farm Online.

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