In today’s Beef Buzz, senior farm and ranch broadcaster Ron Hays speaks with Don Close of Terrain about President Donald Trump’s proposal to lower tariffs on imported beef and the potential impact on U.S. cattle producers.
Close says the biggest concern goes beyond the immediate market reaction, warning the announcement could have a lasting impact on producer confidence. “The damages to that statement are way more complicated and more substantial than just the absurdity of the numbers that we’re talking about.”
Close says cattle producers considering expansion are already facing drought concerns and high costs, including the price of breeding females. “If you put yourself in the role of a producer, you’re trying to think about okay, do I want to go ahead and try to expand in this market complex or not? And so let’s just take a bred female at $4,500.”
He says producers are now being asked to make major investments without confidence that agricultural policy will support those decisions. “You’ve got absolutely zero confidence that our ag policy is going to support your decision to make that sizable investment.”
Close believes that uncertainty could have a significant long-term effect on the cattle industry. “I think we’ve done a huge amount of damage for the long-term view of the market just because of destruction and producer confidence.”
Futures Market Shows Resilience
The announcement also came at a critical time with the fall calf run approaching. Close says uncertainty surrounding the policy could pressure calf prices at a time when producers are already dealing with difficult conditions.
He also points to Friday’s futures market trade following the announcement. While the futures market came under significant pressure early in the session, Close says the recovery by the close was an important signal. “For the pressure specifically, the pressure that the futures market was under from the opening and certainly through the midpoint of the day, but to come back and close higher, I’m really—I think the market did the right thing.”
Close says the market appeared to recognize the potential long-term consequences of the proposal. “I think the market rationalized just how poorly conceived the whole plan was.”
He says traders may also have considered the psychological damage the announcement could cause producers and the possibility that increased imports could ultimately push domestic cattle prices higher. “Ultimately this would drive domestic prices higher than any benefit we would get from the short-term escalation in supplies.”
Cattle Groups United in Opposition
Hays and Close also discussed the unusual level of unity among cattle organizations opposing the proposal. Groups including the National Cattlemen’s Beef Association, American Farm Bureau Federation, U.S. Cattlemen’s Association and others have voiced opposition.
Close says that level of agreement could create significant pushback from the cattle industry. “If you take the division that is between the various ag organizations and specifically the various cattle organizations, and you come with a policy statement like this from the president, and you get every one of those producer groups aligned in opposition, I think the level of pushback to the White House is probably going to be greater than anything he anticipated.”
He believes the proposal may ultimately disappear because of the practical challenges involved. “I think this thing will be quickly swept under the rug because it’s not workable.”
Potential Impact on the U.S. Cattle Market
Close says he believes Brazil could be the primary beneficiary of the proposal, but questions whether enough beef could actually enter the United States during the proposed 90-day period.
He also says that even if additional imported beef did enter the market, the impact on domestic cattle prices may not be what policymakers expect. “If we were to receive anything, even a fraction of that level of 90s, the added demand it would put on 50% lean trimmings to blend that out, it would actually be price supportive to fed cattle.”
Close says that when the proposal is examined from different angles, he keeps reaching the same conclusion. “It doesn’t matter which angle you try to tackle this; it just—you come to a bad ending.”
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Ag Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR above for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
