by Luke Schwieterman, President of Schwieterman, Inc.
COOL has been successfully implemented for seafood. I knew that it
was coming, but I hadn’t really thought much about it until
I was recently shopping for some salmon. In the seafood case of a
store in Garden City, Kansas, I found seafood from 13 different countries
including the United States. There was salmon from three different
countries. I was truly amazed. I had no idea at all that we got our
products from so many different places. So, did the labeling affect
my buying decision? In this case, probably not. I bought the wild
caught Alaskan salmon, largely because that is what I wanted anyway
and it was less expensive. That was what I would have bought with
or with out labeling. However, in the future, if I want to buy shrimp
and my choices are between farm raised shrimp from China, Vietnam,
or Belize labeling will have a much greater impact and I will probably
pass on all of them.
Ignorance is bliss. Before April 4th when mandatory COOL went into
affect for seafood, shrimp was shrimp. In my mind it all came from
the Gulf of Mexico. I really didn’t know that we could get farm-raised
shrimp from so many places in Garden City, Kansas. Now I do, thanks
to a simple label. As a consumer I now have more information at my
disposal. If I want to buy an American product, just because it is
American, I can do that because now I know which products are American.
I have that power now and as far as I can tell it hasn’t caused
a noticeable price increase to get that power. To me, there is no
downside to COOL for seafood, so why would it be any different for
beef, or pork, or poultry? The answer, it wouldn’t.
Towards the end of July the appeal will be heard and the market will
react before and after the court case. Everyone that I know has picked
the “winner” – if there is one. Many in the industry
think the USDA will win easily. We’ll see. As producers our
focus must be on how we may be affected by the decision either way.
There are assets to protect and probably the best solution is to have
put options in place before the trial. The price insurance will help
ease the transition from not knowing to knowing the results. The border
has been closed for so long that the reaction could be muted. After
all, it appears that what was imported on the hoof has been replaced
by increase boxed beef imports. Also, Canada has increased kill capacity
so the need to export cattle is less than pre-border closing. However,
over the last few years, the marketplace tends to overreact to significant
information and there is no reason not to expect the market to overreact
this time as well.
The eastern cornbelt has been experiencing a drought. Now the drought
may extend into the western cornbelt as well if rains do not develop
soon and temperatures moderate. The best hope is that remnants of
Hurricane Dennis drops significant moisture in Illinois and Indiana.
If the drought isn’t broken, December corn is probably destined
to hit $2.70 to $2.80 per bushel. Call options covering your feed
needs over the next six months is likely your best strategy in such
an iffy price climate. ©
Schwieterman, Inc. is a Registered Commodity Trading Advisor in Garden
City, Kansas. The information herein is based on data obtained from
recognized statistical sources believed to be reliable. However, such
information has not been verified by us, and we do not make any representations
as to the accuracy or completeness. Past results are not necessarily
indicative of future results. The risk of loss in trading commodity
futures contracts can be substantial. You should therefore consider
whether such trading is suitable for you in light of your financial
condition. You may visit their web site at www.upthelimit.com .
