Page 6 - MWC 3-31-2022s
P. 6

The Midwest Cattleman · March 31, 2022 · P6
      Increased Uncertainty Clouds Cattle Market Optimism

      By Derrell Peel - Oklahoma State University
                            The war  major  grain  producing  and  kets.   Russia is a major oil  drought will begin to impact
                         in Ukraine  exporting countries.    With  producing              and     exporting forage production and pro-
                         has injected  the reality of current dis- country and potential dis- ducers will face rapidly wors-
                         much uncer- ruptions of grain movement  ruptions in global energy  ening production conditions
                         tainty into  from the Black  Sea region  markets are contributing to  and additional management
                         global mar- and the uncertainty of what  sharply higher energy prices.   and marketing challenges.
                         kets.   Mar- could happen, crop prices  Russia is also a major produc-                  The supply fundamentals
                         kets do not  have soared, pushing high  er and exporter of fertilizer.  of the industry will contin-
      like uncertainty and much of  feed prices much higher.                These will add to inflation- ue to be supportive with cat-
      the market reaction thus far          Just  a few  more weeks  ary pressures for production  tle numbers decreasing and
      is about uncertainty rather  will determine whether crop  costs and are a threat to beef  beef production declining
      than reality.    The majority  planting in the Ukraine will  demand as higher gas prices  this year. Beef demand has
      of impacts thus far on cattle  be possible.  All crop markets  directly impact consumers.               been strong up to this point
      markets are indirect rather  are higher, but the uncer-                 At this point, direct im- but clearly there are more
      than  direct beef  market im- tainty is focused on the near  pacts of the conflict on global  concerns about demand and
      pacts.                             term, pushing old crop fu- beef markets are relatively  input prices going forward.
         Cattle markets are being  tures higher relative to new  small.   Russia is the ninth  A war situation like this has
      impacted by the effect  of  crop contracts in the fall.               ranked beef importing coun- no analog in recent history
      the conflict on crop markets.         The most broad-based im- try but only accounts for  and there is no way to an-
      Both Ukraine and Russia are  pacts relate to energy mar- roughly three percent of glob- ticipate when or even if the
                                                                            al beef imports.   However,  situation will stabilize in the
                                                                            global beef market flows may  foreseeable future.
                                                                            be impacted more depending           Producers have lots to
                                                                            on how various countries are  watch in a very dynamic and
                                                                            affected by the conflict.         volatile situation.    There is
                                                                              All of these external fac- little choice but to stay tuned
                                                                            tors combine with the loom- and try to remain as flexible
                                                                            ing threat of widespread U.S.  as possible.
                                                                            drought on the cattle indus-
                                                                            try.  In just a few weeks, the

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