It seems impossible to talk about most commodity markets and not mention volatility, and the cattle market is no exception. Market Analyst Brad Kooima said volatility is something producers have to adapt to.

“The volatility is off the charts. I took a day off and went down to the Iowa State Fair, and I’m watching the markets on my phone, right? And I’m not even on the roller coaster, and it feels like I’m on a ride, right? I was saying to the other brokers this morning that I remember when I first started, we had the dairy buyout, and I thought, holy smokes. I mean, we went down the limit, which was $1.50 for three days in a row, so we lost four and a half dollars. We lose four and a half dollars a hundred now, then we go get a cup of coffee. The volatility is, it is what it is, and either you adapt, or you get run over.”

What are some of the reasons driving the volatility?

“It’s because of AI. It’s because of algorithms. It’s because of HFTs. It’s because of these chunks of money that are trip-driven and seem to be able to sense where these spaces are in the market, where all of a sudden, if you sell enough of it, and suddenly, you break two and a half or $3 and then, you know, then they catch, and then you don’t. So that’s part of the reason why, I think, and that’s just because of the nature of the participants in the marketplace.”

While there is steady activity in most sale barns, he said the packers may begin pulling back somewhat on their bids.

“If they can, then that’s what they’re doing. You’ve got pretty big kill cuts here last week, and pretty big kill cuts again this week. There’s certainly more than one major packer that’s down to 32 hours, which is four days a week. Their margins are poor, obviously, and that’s what they’re trying to do, and there’s not enough cattle to go around. Who’s kidding, who? If the producer feedlot stands firm like he has for months and months and months, and cash firms back up here like it’s done how many times, then the market will probably respond favorably.”