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Is Cattle Market's Reaction to HPAI Justified?

ShayLe Stewart
By  ShayLe Stewart , DTN Livestock Analyst
Fear and turmoil surrounding the HPAI flu could be the market's focus for another day or another month. Whatever the timeline may be, the cattle market will continue to trade five days a week and fear shouldn't be the market's only driving factor. (DTN photo by ShayLe Stewart)

I'd like to offer my two cents surrounding the cattle market's instability this week and potentially share a perspective that could give you some peace heading into Easter weekend.

I'd be remiss if I didn't first share that I loathe watching the futures market trade lower like it did on Tuesday, March 26. The feeder cattle contracts closed anywhere from $4.00 to $5.00 lower, and the nearby live cattle contracts closed mostly $3.00 lower. But throughout the day's trade, a deep-rooted unhinged, nervous nature seemed to penetrate the market to its innermost core -- despite the market's fundamentals not having changed whatsoever. Beef demand remains incredibly strong; feeder cattle supplies are still thin; this past weekend the Northern Plains received moisture which should ease drought concerns in that region; and there are no indications replacements heifers are being kept back to begin to regrow the U.S. cowherd. But still, within one single day's worth of trade, the market lost its mind and gave away months of technical positioning all because of fear.

I'm not a veterinarian. I'm not an expert in avian-transmitted diseases. But I have studied the market long enough to know and recognize when fear is the basis for its move. And fear is rarely a sound or justified reason to move the market lower.

At the time of this writing, the HPAI "outbreak" has realistically had relatively minute ramifications on the dairy cattle affected. Chris Clayton, DTN's Ag Policy Editor, wrote a piece thoroughly describing the flu which you can see here:….

But in short, the flu is currently only affecting older dairy cattle, and when infected, they lose 10% to 20% of their milk production, have a decrease in appetite, and make a full recovery within seven to ten days. Thankfully, USDA made a public statement that the flu will not affect consumer health.

I'd be more understanding of the market's meltdown if the dairy cattle were having to be euthanized, if the infected cattle were sluffing calves, or if the flu posed any risk to consumers; but that's simply not the case.

I understand these situations are unnerving because they're evolving, and frankly, no public office has been able to answer some of the big-hitting questions such as: Could the flu mutate and become transmittable between cattle? This is potentially the biggest concern right now.

We may or may not receive an answer from health officials on that question, but regardless if we do or don't, the market will continue to trade five days a week as it always does.

This leaves you, me, other cattlemen, day traders and other market participants to do our jobs, as we always do. As Senior Policy Advisor for the United States Cattlemen's Association Jess Peterson has said, "Markets work best with active and informed participants." That should always be our focus in uncertain market scenarios. We should seek information and knowledge so we can be as informed as possible. But from that informed position, it's our job to approach the market sensibly and not spread fear and chaos.

The market could potentially see more downside action in the days ahead as traders seem to be the quickest to react to a bearish headline, but I'd encourage you as cattle producers to keep a long-term, industry-wide perspective when you're viewing the market through the remainder of this week. I can't tell you if the market has another day of downward trade, or if we will see a downward trend like we did last fall, but I don't believe the top of the market's current bullish run has been seen yet either. Until we start to see heifers kept back for replacements, tight supplies should keep prices high.

ShayLe Stewart can be reached at

ShayLe Stewart