From the Cattle Report that is pinned in this section. http://www.agcenter....ttlereport.aspx
I remember when Eastern went under. I had a friend who was a buyer for them. It really shook up the cattle industry for a while. Stockyards took a big hit financially. I have not been able to find a link to what is going on this time, or what company.
If wisdom is based on acquired knowledge from history, the livestock industry has failed its membership and its mission to learn from history -- thus allowing the repeat of obvious weaknesses in its structure. As if the pains of downsizing were not enough, structural defects in the ways cattle are traded, continue to plague the industry. The Eastern Livestock tragedy and resulting chaos is barely dimmed in our memory bank. The litigation from Eastern is still in the courts and may continue for years and now we hear of yet another crisis in payment and trade.
This past week checks began to bounce all over the State of Mississippi spreading to Alabama then other states across the country as one of Mississippi's large cattle operations seems to have failed. The saga like many before it has all the characteristics of a soap opera. Rumors spoke of a principal checked into a mental hospital, a affiliate with cooked books and a reported suicide, and the involvement of a Kansas feedyard and bank.
Some human actions will never cease. Among those are fraud, deceit, and human treachery. There remain easy pathways to make fraud within the industry much more difficult for perpetrators. Foremost among the solutions that provide a quick fix is mandatory animal identification. The current system allows cattle dealers the ability to sell to feeding firms large groups of cattle for targeted delivery dates and receive in return downpayment monies. In many cases those cattle are never identified by the owner's name, location and specific number of cattle. They are sold in load lots between the broker and feeding firm with only a delivery date. As long as this structure is allowed, brokers can speculate by selling loads for future delivery and hoping to purchase them in the marketplace later at a reduced price. The problem is sometimes the broker is not financially able to support the risk and the market does not always go down when the broker suspects.
A national animal ID database would link purchases to specific groups of cattle and would confirm liens on those cattle and confirm they are sold and under contract. This would transition the industry to a system of trading real cattle and not over the counter, off the balance sheet, speculative positions that some people don't have the financial assets to support. Market makers who would like to place bets of the future direction of cattle prices have a facility called the cattle futures market where they can do just that but are subject to margin calls and supervision.