Date of this Version
Farm and Ranch Management (January 4, 2021).
This article was first published by In the Cattle Markets.
Also available at https://lmic.info/publications/in-the-cattle-markets
First two paragraphs:
Trade occurs when price differences between the two locations are large enough after accounting for transportation cost, exchange rates, tariffs, etc. Exports vary throughout the year since prices reflect current and future supply and demand situations. Seasonality in cattle production, meat demand, and market disruptions are some examples of why wholesale beef prices increase and decrease within a year.
The inability to market cattle in the second quarter of 2020 and increased demand for retail beef products due to government gathering restrictions in restaurants caused wholesale beef prices to rise to historical levels. Beef wholesalers can choose to market beef to the domestic market (retail or food service) or the export market. So how did higher domestic wholesale beef prices impact beef export sales and commitments in 2020? Likewise, knowing how the market worked through supply and demand disruptions in 2020, what can we reasonably expect from export sales and commitments in 2021? These questions can be partially answered by looking at historical seasonal export sales and commitment patterns and comparing 2020 to years with large trade disruptions.