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R-CALF seeks investigation into cattle price collapse

Cattlemen’s organization R-CALF USA is asking the U.S. Senate’s Judiciary Committee to investigate the collapse of cattle prices in 2015.

One of the things they want to know, says R-CALF CEO Bill Bullard, is whether the major meatpackers manipulated the cash cattle market.

“We saw, for example, in September there was one week where there were no cash sales reported to mandatory price reporting in the fed cattle market, consisting of Texas, Oklahoma and New Mexico,” Bullard says. “That’s only the second time in the history of mandatory price reporting where no cash cattle sales were reported.”

Bullard theorizes that the meatpackers were working together to shun the cash market “and instead they were shifting large volumes of cattle into their formula contracts—and by avoiding the cash market, they allowed the price decline to accelerate, if not actually causing that price decline”.

Bullard says R-CALF has provided documentation to the committee showing that independent cattle feeders lost more than 500 dollars per head of cattle sold during the collapse and, consequently, “the very foundation of the U.S. cattle industry’s feeding sector – its independent cattle feeders – was irreparably damaged.”

“We’re worried that we have significantly reduced competition in the cattle industry because we don’t think some of these feeders are going to come back. We don’t think their lenders will allow them to, given the huge losses they experienced during that price collapse,” Bullard says. “So we need an investigation to find out what happened so that we can take steps to ensure it does not happen again.”

Bullard says the investigation also needs to examine “the unprecedented volatility in the cattle futures market” which he says “rendered it useless for price discovery purposes”.

AUDIO: Bill Bullard