The livestock industry has faced unprecedented challenges during the COVID-19 pandemic. Plummeting cattle prices and meat processing plant shut-downs have increased volatility in the market. These changes have raised questions in the industry, with many asking why cattle prices are falling as demand for meat has increased. During the April 22, 2020 meeting of the CFTC’s Agricultural Advisory Committee announced the creation of a Livestock Task Force. The task force’s mission is to monitor events in the agriculture market in light of years of difficulty in the farm economy and more recent challenges brought on by COVID-19.
Although the task force’s name suggests a focus on livestock, the scope of the CFTC’s concern is much wider. The Chairman of the CFTC, Heath Tarbert, focused on the agricultural commodity markets as a whole in his remarks during the announcement. The Commissioner of the CFTC, Brian Quintenz, further noted the goal of making the futures market a reliable and efficient hedging tool for America’s farmers and ranchers, stating that the “agency has a unique role to play in protecting America’s farmers and ranchers.”
The CFTC also announced the appointment of a liaison to the USDA The U.S. Secretary of Agriculture, Sonny Perdue, applauded the efforts of the CFTC, discussing the importance of their actions, calling the roles of the USDA and CFTC “intertwined” as futures trading is a bedrock issue facing agriculture. Purdue mentioned supply-demand disruptions and divergences that are seemingly unreasonable, leading to an investigation into price manipulation, collusion, restrictions on competition, or any unfair practices or unfair advantages.
The task force’s work could uncover reasons behind low cattle prices, including market manipulation that could have affected livestock sales. If you’d like to discuss this issue further, please contact Christian Levis (clevis@lowey.com) or Roland St. Louis (rstlouis@lowey.com) .