|
|
Aug 30, 2016 | 08:16
1
I guess we all knew the day would come that beef prices would drop, and drop it has. Grasser steers selling for the same or less that what people paid for them last fall. While it was fun while it lasted, retail beef pricing has barely moved since beef prices started dropping over a year ago. I went online and compared todays retail price to the price a year ago and I saw red. Both red with anger and money lost.
It seems like along the primary production line some groups will make some money, some will lose some money but after 20 years, each group has made out okay. That is unless it is the retailer. They ALWAYS make money, and right now their profit margin on beef would make the BSE days look like average profit margins. (remember cows being worth $50 but a pound of ground beef being $2.50)
Going into the fall run, it is pointing to feeding calves instead of selling them. If anybody had a crystal ball I would really appreciated renting it for a day or 2.
|
|
|
Aug 30, 2016 | 08:44
2
No doubt....and with cheap barley, that normally brings higher prices...gotta love our system.
But, I guess, if we don't like it , we can always go head to head with Cargill!
|
|
|
Aug 30, 2016 | 08:46
3
The U.S. has been in an overall meat glut for more than a year now.
The problem now is rising carcass weights and a gun-shy wholesale beef buyer. Packers are backing up and lift times have moved into mid-Sept and October. Bottomline; the cash-strapped consumer is bucking at retail beef prices.
Pork cutouts have also taken a nasty tumble pulling hog bids sharply lower as well.
Canada has been in a recession since January, 2015 and the U.S. is now on-the-cusp of entering one in 2017. This will continue to impact our beef movement (IMO).
The fall calf run will be interesting to see if prices can stabilize. 500lb calves have already declined 30% over the past year.
|
|
|
Aug 30, 2016 | 08:54
4
This thing hasn't even seen bottom yet. Errol 2 more years before recovery? Realistically prices have been retreating albeit slowly to start the last few years.
|
|
|
Aug 30, 2016 | 09:00
5
But we have to feed the world, Errol....;-)
Our county has an "Ag Use Strategy" .....for the greater good...keep larger tracts of land so we can produce more commodities, instead of a family being able to buy 20 acres of marginal land and grow their own food.
You know, like our oil mentality : "where else are they going to get their oil?"
But, thanks for the insight.
"Woke up grouchy one day....but its been a few years, so I guess this is just who I am."
|
|
|
Aug 30, 2016 | 09:22
6
The cattle and beef market is not alone in this sell-off.
We're experiencing a nasty 'depression' in global commodity markets. And central bankers have no ability to manipulate commodity prices. Commodities reflect true economic health.
Unfortunately, there is a long tail to this economic problem. The U.S. pretends they are in-recovery, but their 2nd quarter GDP is just 1.1% Their government debt has doubled in the past 8 years.
Calgary downtown skyscraper construction is being boarded up. At Stamps game on Sunday with stadium 50% full. This is a reflection of the energy world.
Now U.S. wheat futures have collapsed recently as well. The Black Sea region continues to dictate global export wheat prices.
As business owners, we all have to try to guard price risk and lower costs. This economic reality has hit the consumer level hard which has now directly impacting our local cattle prices (IMO).
|
|
|
Aug 30, 2016 | 10:20
7
So, when do equities follow in line to where they should be? Or....are they where they should be???
Thanks for the input....
|
|
|
Aug 30, 2016 | 11:28
8
Agree with Errol,but i think it might be worse,lots of signs saying housing is about to pop,but i have been so wrong for so long,i don't know anymore.I call this the cost push,talked about it before but i don't think its the proper def.Supply and demand function basically comes unglued.Costs through the supply chain go up while demand goes down because consumers costs go up leaving little disposable income,so supply collapses(eventually),fuel for the fire that begins to feed itself.Everyone wants to eat beef but they can't so supply drops with demand and prices go up.13 years ago i watch warren buffet buy up dollar stores,i knew why then i know why now.
Because somebody thought a command and control economy was a good idea instend of free market capitalism.
Cant wait for someone to finally write a book about the rise of the north american oligarchs.
|
|
|
Aug 30, 2016 | 12:05
9
I hear you Cotton....if correction was allowed when it should have been, would not be as painful.
Supply and demand works...as long as there is competition, not monopolies...and we have to work that out. Saying same thing for years, but started not believing myself....
The book has been written...Crash of 2016, Thom Hartmann...although he has his own leanings, think the basis is explained.
Would still like others feedback on it.....
|
|
|
Aug 30, 2016 | 22:57
10
No one owes anyone a living. That seems to be lost amongst many ag producers as they continue to produce, work off-farm jobs and pray that someone will show up on their doorstep someday with a sack full of money to pay for all of the years that they felt unappreciated.
This round of prices officially wiped out the backgrounder here. Some are done with cattle completely, and others are introducing cow/calf to their operation, thinking that is where the real big money is hiding - haha. I'd like to see a round or two of $500 calves just to wipe those kind and others out from the market. The last thing needed is more calves in this country from people who have no vision but just a quick dollar. Talked to a young producer who is up to his neck in debt with FCC - about what FCC said about buying bred heifers. Said they won't finance him for breds costing more than $1500, period. Might see a fair number of breds heading to the feedlot this fall at those prices.
Fortunately, cow and bull prices are good and all signs point to cowherd contraction in a big way over the next couple of years.
Last edited by 15444; Aug 30, 2016 at 23:02.
|
|
|
Aug 31, 2016 | 05:54
11
15444
Thanks....I remember poor prices for calves and I was getting all excited about expanding the herd. In about 7 years sell it down.
Sure it's not for the faint of heart....but there is opportunity.
I figure when the banks don't lend ...it's time to get in. Missed one cycle.
There were guys buying opens for 2100 bucks and selling them as breds for 2200 in the fall....no money there a couple years back. But that's pure speculation.
I have some pasture some good producing hay and there is always green feed.....a nice easy build up with good cows to 200...then dump them when the high hits in 6 to 7 years... blah blah blah.
|
|
|
Aug 31, 2016 | 06:02
12
15444
Another story during high calf prices.
The manager at the auction house was looking over my cheque and saying I did pretty good. Yup and thanked him for selling them.
Then he says any complaints...nope.
Well he says... a lady was complaining that there was 500 dollars difference in their top end to their poorer calves.
I stopped him there.... 500 dollar difference...fuck I remember not getting 500 a calf ... let alone the difference...
He cuts in and says ...yup you get it....
Bottom line .... those were good prices....and were to be taken advantage of.
|
|
|
Aug 31, 2016 | 07:12
13
What goes up also comes down. I don't know if it's just the numbing effect of surviving the BSE debacle, but the price drop just hasn't bothered me as much as some. When the prices hit the roof that actually made me kind of nervous. I was thinking this was so high that we would start to lose our feedlots. I know the first thing we did was stop buying backgrounding calves for the first time in 30 years. Sure never regretted that either. We decided to just take the money on our own calves and concentrate on paying down debt.
That market only had one direction to go. Down. Not the time to get all enthusiastic and crazy with spending. Far better to just carry on as if prices are low, try and control spending as if we had $500 calves and accept the bonus without running out and throwing it around like the money will always be there. May 20, 2003 was an attitude adjustment that stuck on our operation.
And what goes down will also go up again. You just have to be smart while waiting for it.
|
|
|
Aug 31, 2016 | 08:50
14
My neighbor was borrowing money while prices were at the top, and was quite upset that the lender was basing his cash flow on more "normal" calf prices, rather than the extremes at that moment. Which we all knew were here to stay.... I think his banker did him a big favour now.
|
|
|
Aug 31, 2016 | 09:39
15
Cattle feeding economics will rebalance itself. Calf prices continue to drop, but feed will be cheap for a long spell.
Supply and demand will again sort itself out naturally without government meddling . . . .
|
|
|
Aug 31, 2016 | 11:54
16
Why doesn't the cattle commission spend more dollars letting the consumer know how much they are getting ripped off at the grocery store relative to beef prices?
|
|
|
Aug 31, 2016 | 14:49
17
Life will go on markets will go down then back up. Be happy there's lots of feed around to keep cop down and eventually breeding stock prices will decline so buying good quality for guys like me is attainable. Grasser guys will lose their grass and ass this year but that happens at least once in the 10 year cycle. I have not bought any females for 3 years and have just maintained my numbers. In fact we dumped a pile of lates and opens this spring. When guys were paying $4000 for breds you knew this market was topped out. Even guys paying $5000 for $3000 bulls you knew the end was near.
Fall calf prices started declining a couple years ago but bred heifer prices actually went up. It must be a ripple effect going on. Guys cash in previous year and then think it's time to expand or get into cattle. Those $4000 heifers will not pay for themselves if you plan to make a herd on those prices. Though if you buy a few and they raise some pisscutter females that's different.
|
|
|
Aug 31, 2016 | 19:39
18
 Originally Posted by tweety
Why doesn't the cattle commission spend more dollars letting the consumer know how much they are getting ripped off at the grocery store relative to beef prices?
Probably don't see a lot of merit in talking down the store price of beef.
|
|
|
Sep 2, 2016 | 08:34
19
Beef prices continue to collapse this week driving the board 'limit down'. And Labour Day is one of the highest retail beef demand weekends of the year.
The drop in consumerism is now taking a heavy toll across North American economies.
|
|
|
Sep 2, 2016 | 22:35
20
Tweety same could be said for all grains , oilseeds and pulses
|
|
|
Sep 2, 2016 | 22:38
21
Restaurants have priced beef to unaffordable levels for 90% of us
$40 for a steak supper - fuk me , let alone they want 20% tip
Sooner or later it was going to happen
No one can afford to eat out at all , Fukin crazy
|
|
|
Sep 9, 2016 | 09:11
22
Interesting thread about beef demand. I think anything we can do to encourage demand is good for our business, even if it means we can't afford to eat a steak dinner out. Beef is a luxury item for most of the world, and needs to stay somewhat in that space otherwise, the pork and chicken model of production will take over completely. Without a premium in the marketplace, we have to simply compete on volume and margin. Not really a sustainable practice in my mind. If demand rises, then so does price (to a cyclical point), meaning we might be able to afford that dinner for our own.
I just read an article about selling calves in the fall
http://[http://cattlenetwork.com/adv...r-calves-fall]
and it is interesting to see the perspective. I understand Kris' point, but am not sure why you would keep calves longer when the feeder sector is losing record amounts. Sometimes the first profit is the best (and maybe only profit).
|
|
|
Sep 9, 2016 | 17:19
23
Originally Posted by smcgrath76
Interesting thread about beef demand. I think anything we can do to encourage demand is good for our business, even if it means we can't afford to eat a steak dinner out. Beef is a luxury item for most of the world, and needs to stay somewhat in that space otherwise, the pork and chicken model of production will take over completely. Without a premium in the marketplace, we have to simply compete on volume and margin. Not really a sustainable practice in my mind. If demand rises, then so does price (to a cyclical point), meaning we might be able to afford that dinner for our own.
I just read an article about selling calves in the fall
http://[http://cattlenetwork.com/adv...r-calves-fall]
and it is interesting to see the perspective. I understand Kris' point, but am not sure why you would keep calves longer when the feeder sector is losing record amounts. Sometimes the first profit is the best (and maybe only profit).
Seen this rodeo before. Lost money backgrounding my calves in this scenario. Best to keep lots of breeder heifers and move the rest culls included. When all I can insure for is $134 850 weights at a $5.40 premium there is no money if the trend holds. Lick your wounds now and regroup for next season. When the cycle starts to turn is when feeding will pay a couple years.
|
|
|
Sep 12, 2016 | 07:55
24
Originally Posted by WiltonRanch
Seen this rodeo before. Lost money backgrounding my calves in this scenario. Best to keep lots of breeder heifers and move the rest culls included. When all I can insure for is $134 850 weights at a $5.40 premium there is no money if the trend holds. Lick your wounds now and regroup for next season. When the cycle starts to turn is when feeding will pay a couple years.
I agree with that sentiment. We have made very good money backgrounding in the past, but not on a down cycle. The article I was referring to was saying that cattle are at heavier endpoints than ever but average WW that is sold off the cow has not changed much. This is interesting, but I think they forgot to ask how much margin is being made on the last pounds put on... Better to sell lighter with a margin than heavier with a loss as nearly as I can figure. One advantage of low costs is that you can cash flow with fewer calves, thus freeing up expansion possibilities through retained heifers. We have not historically bought bred heifers as they are often overpriced and rarely as well suited for our operation as what I can produce at home. This year is our second of using sexed semen and I am pretty excited about how it is working and what it does to free up resources to expand while creating more calves for sale as well. I think the only surprising thing about this cycle for me is the speed it has moved (thought I had at least another 6 months midslope) and possibly the volatility that it has shown. I also agree with your assessment of the insurance program. We insured our calves this year (thanks US election for creating extra uncertainty) on a program that is terrible for those of us that calve later, but the volatility is hard to figure.
|
|
|
Sep 12, 2016 | 11:18
25
Originally Posted by smcgrath76
I agree with that sentiment. We have made very good money backgrounding in the past, but not on a down cycle. The article I was referring to was saying that cattle are at heavier endpoints than ever but average WW that is sold off the cow has not changed much. This is interesting, but I think they forgot to ask how much margin is being made on the last pounds put on... Better to sell lighter with a margin than heavier with a loss as nearly as I can figure. One advantage of low costs is that you can cash flow with fewer calves, thus freeing up expansion possibilities through retained heifers. We have not historically bought bred heifers as they are often overpriced and rarely as well suited for our operation as what I can produce at home. This year is our second of using sexed semen and I am pretty excited about how it is working and what it does to free up resources to expand while creating more calves for sale as well. I think the only surprising thing about this cycle for me is the speed it has moved (thought I had at least another 6 months midslope) and possibly the volatility that it has shown. I also agree with your assessment of the insurance program. We insured our calves this year (thanks US election for creating extra uncertainty) on a program that is terrible for those of us that calve later, but the volatility is hard to figure.
If the insurance was too good it wouldn't last. Crappt thing is there is no incentive or security to feed your calves. School of hard knocks; failing to listen and act on market signals will spank you. So much uncertainty with everything right now and where it goes when the run comes.
|
|
|
Sep 14, 2016 | 23:01
26
Have extra barley that is not worth a whole lot either...so maybe....???
|
|
