Beef Industry Basics – Part 2

Mar 13, 2020

Beef Market Basics

Way back in the day, when I was a kid, the local TV stations all did a morning commodity market report, and I used to wonder what in the hell they were talking about. We’ve come a long way. The raucous trading floors have been replaced with computerized transactions, and the opening market report is available on-line, on demand. I still have no fricking clue what they’re talking about – breakers, boners, calves on feed, dressed, live, boxed beef cutout values, January 2021 feeder futures.

I can understand about half on a good day. And that’s sort of embarrassing, considering this information has a direct impact on me, and at some level, this information is the result of my actions. For me, it’s hard to connect my day-to-day activities on the farm with the activities at the Chicago Board of Trade, but the tie is there, and knowing something about one will hopefully help me understand the other.

This is all part of the “Big Ag” we love to hate. Whether we’re consumers, cattle owners or land owners, we shape it, we respond to it. We have a role in it, whether we’re aware of it or not, whether we like it or not.

And while we all know that trying to time the markets is a fool’s game, knowing that burger consumption goes up in the summer, and hay prices go up in the winter, can help us make some of our marketing decisions. Global events, like the Australian wildfires, coronavirus, and social unrest in Brazil most certainly affect US beef prices, but how much impact should they have on our day to day decisions and operations? In my mind, an awareness of local, regional, national, and global events can help us optimize the use of our own resources, be they time, cash, land or livestock.

And an overview of the United States cattle market is a good place to start.

More than just cattle, the US Beef Industry consists of grocery stores, breed associations, trade negotiators, chefs, distribution chains, union organizers, packing houses, animal rights activists, the wellness community and regulatory bodies, as well as our very own, ever competing, NCBA – National Cattlemen’s Beef Association (aka The Checkoff) and R-CALF USA (Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America). But as ugly and expansive as it can be, it all starts on the farm.

So Where Does Your Beef Come From?

To quote many great scientists, economists, and legal minds, It Depends

The source of your “beef” comes from largely depends on what cut you’re eating. Premium steaks typically come to you through the Fed Cattle sector. Burger, and steaks in a cafeteria-style restaurant are most likely sourced from older cows, either beef or dairy cows, part of the Cow Beef sector (hence the quotation marks around the word “beef”). And if you buy beef at a farmer’s market, or through most buyer’s clubs or CSAs – Community Supported Agriculture – that’s the small, but growing Direct Marketing sector.

Hopefully I’ll be able to translate cattle-producer jargon-ese into simple English.

Stay tuned.

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