Hi Guys

[cottonpicken]

Spend most time in the marketing room,but thought i would pop over to say something.

The specs will be watching and in my opinion are ready to pile in.

Within six months your prices will dramatically rise.(maybe sooner)

IMHO

[grassfarmer]

OK Cottonpicken i'll bite - how do you see speculator money impacting real life cattle prices and returns for producers?
Unlike the grain and pulse sector we do not have a product(beef)that is relatively easy to store and not too many places in the world would buy (or could afford) our beef even at current prices. Given the biofuel inspired increase in grain prices it will remain a high cost, negative margin business to fatten cattle in a Canadian feedlot. As far as I can see the bulk of our beef will continue to be consumed on the N.American continent. With the US economy in the toilet and a few multi-national corporations in total control of the north American beef supply, processing and distribution system how will ranchers benefit from speculator money entering the marketplace. Indeed given the above why would speculator money even be interested in the Canadian beef sector?

I think the solution to our woes is to break our product out of this continent and that way we certainly could be looking at higher returns. Current prices in the United Kingdom for live young fat cattle are ranging from the equivalent of $140 to over $160 per cwt. Cull cows there are averaging over $90 cwt with tops of $113. The EU is facing an ever increasing shortage of beef, compounded now by the threat of less beef from the dairy herd as dairy farmers ramp up their pure bred genetic production in anticipation of the removal of dairy quota. Beef prices in producing countries like the UK look set to soar into unknown territory.

Unfortunately the industry "leaders" in Canada have decided we don't want any part of this action because we want to stick with the US on their stupid hormone treatment regime and on the cull cows because we refuse to consider BSE testing because the US owned packers don't want that.

[per]

I too would like to hear your reasoning. I know from the commodity treads that you have given this much thought and have researched as well. Grassfarmer points to some fundamental problems with our industry that are fixable with some will but our current "leaders" are bucking some of us all the way. It's like dealing with the CWB.

[farmers_son]

Grassfarmer: You might be interested in this site that lists beef import tariffs for various countries, including the EU. Canadian beef enters the U.S. tariff free because of NAFTA. Canadian beef would have to pay a tariff to enter the EU. It appears to me that the tariff would be between 20-100%. Japan charges a 50% tariff on all beef imports from Canada.

Canada allows offshore beef to enter our country tariff free within the TRQ.

See:

http://www.mla.com.au/TopicHierarchy/MarketInformation/MarketAccessandSupport/MeatTariffs/Beef Tariffs and Quotas.htm

[cottonpicken]

Nobody likes a horn tooter.
But...
toot toot
I called 20 a bushel wheat eight months before it happened.
And theres documentation in the histories of this site to prove it.
Saying something like that and being laughted at and ridiculed,was a learning experience.
Just like when oil was 27 dollars and i was telling people it was going to the moon.
For a few seconds i thought why bother giving ungratful people the insight of a few thousand hours of work-for nothing?
Until i remembered the law of karma.

It would take forever to explain my reasoning,but i'll give you some highlights in point form.

-to much money is being printed,for the first time globally
-dont get to caught up on supply/demand figures(something the grain guys wont get out of their heads)
-we are in full fledge inflation melt down(or up),its called stagflation.
-money naturally and inevitably flows into tangibles
-the sharks or speculators(thats me)simply bye cheap things before the dumb money comes along(thats you,no offence)
-when something gets to high we sell to you,when something is to low we buy,only to sell to you again later
-back to the money,how many millionaires were there twenty years ago?How many now?
-what did a chocalate bar cost in 1945?
-ever here off the chocalate bar wars of the fourties?
-will anything ever cost as much as it did in 1945?
-why?
-progress?
-has standard of living increased?
-do not both parents have to work now?
-do you think the gold price is followed by all the financial houses of the world because people want to know what jewerely trinkets will cost them?
-is a cow not a commodity?
-does it take ENERGY/TIME to feed raise slaughter?
-have not most commodities soared to knew highs?
-do you think the sharks simply havent noticed or are to stupid to buy a depressed commoditie?

-or perhaps they have all ready bought,at the bottom and are patiently waiting.Like me.

[grassfarmer]

Farmers_son, that website link showed the situation for Australian beef exports. I believe that several thousand tonnes of beef is imported into the EU annually tariff free.
If there were no prospect of Cdn exports into Europe why does the CCA pay a large sum (@ $100,000 a year I believe) of levy money to the GIRA Euro consulting group to gather market information on potential outlets for Cdn beef?

Yes Cotton you're very impressive - no coherent argument or evidence to back up your claims and your spelling at a grade three level - and you're calling us the dummies? (no offence.)
What price will feeder calves be in October 08? Will you be owning any? How much wheat did you sell at $20? Talk is cheap.

[cottonpicken]

Sell,sell,sell grassfarmer.

Maybe i am wrong.
Or not.
We'll know in six months.

I take it that your future vision is a lower beef price?

Oct 08-on or before,194 in the futures,were at 115 now.

Did i sell any 20 dollar wheat?
No.
But my old,old durum that i sold is good.
And my old,old mustard is worth more(which i just sold,to buy something cheaper)

You sell all your calves at the low grassfarmer?

[grassfarmer]

No I like to sell close to the top Cotton, pulled the trigger on some 6 weight steers a month ago when they brought $1.1375. I guess with the benefit of your knowledge I should have held them to make $1.94 ...or maybe $0.86? in October. As you say we'll know in six months.

[farmers_son]

Grassfarmer: It is not that there is no prospect of sales into the EU or into Japan but when you quote live cattle prices in the UK and suggest there is a market for our beef because our live prices are lower you need to factor in the tariff.

If your forecast of EU beef prices soaring are correct (I hope you are correct and am guessing you are) that can only help support beef prices globally. The sad thing about tariffs based on a percentage of the imported price is that the tariffs soar too as the price of beef rises.

I have made comments in these threads to the effect that rising commodity prices will inevitably cause beef prices to rise too. As has been pointed out, beef and cattle are perishable products and you can only hold on to cattle for the market to rise for a limited amount of time.

The markets for grain and for live cattle do not function in the same way because beef is a perishable product while grain can be stored for long periods of time. The sixty four thousand dollar question is not whether cattle prices will rise but when they will rise and how high will they go.

Even hog prices are improving.

U.S. August Live Cattle Futures closed above $1.00 last Friday. The MACD crossed on Friday and shows an uptrend. The CME was closed Monday due to holiday but many will be watching to see what happens this week. I still have my calves, hope I guessed right. For a long time having calves on feed looked like a money losing proposition.

[jensend]

i think it depends on how long the commodity bubble lasts before it bursts. there was just an analyst from ny on bnn who feels 50 to 80 dollars of the current price of oil is for 'non-fundamental' reasons meaning pure speculation. if the specs push any of these markets too hard they will collapse and that could be any time this year i would think. jmo.

[greybeard]

The EU may need beef but that is not the message they sent to Brazil. Brazil was paying the tariff on over a billion dollars worth of beef only to be shut out because they didn’t have tractability equivalency. EU suggested they start with about 25 ranches.
Remember, we’re talking over a billion dollars in exports. But EU says only send product from 25 ranches. Makes RCALF look like schoolboys.
I too believe the funds will run this market if it starts to show some signs of life.

[grassfarmer]

Greybeard, I would suggest that the EU took the correct stance with Brazil in this case. The EU desperately needs beef but at the same time they cannot play fast and loose with animal health - the real issue with Brazil is Foot and Mouth affecting certain areas and this not being adequately controlled due to a non-existent traceability scheme and porous national borders. If a country gets foot and mouth exports are halted until it is cleared up - the UK suffered that fate twice in 7 years and it is right that Brazil should face the same consequence.

[grassfarmer]

Farmers_son, I believe you understate the opportunities in Europe for Canadian beef. The reason we don't sell more in the EU is not because we don't have a good product or because of high tariffs it's because of pig headed stubborness by our industry leaders and their apparent control by the US packing sector.

The Hilton tariff (at 20%) is set up specially for N American supplies of high quality beef and has 11,000 tonnes a year of unfilled quota. North American countries do not fill this because of their adherence to hormone treated beef.
There are also non tariff markets for beef offal and 16% tariff opportunities for cooked/prepared beef and offal products.
All told there are probably developing opportunities in Europe for 100,000 tonnes a year of product at 20% or less tariff rates - and we are not interested in that kind of market??
With the foot and mouth problems in South America and a general beef production decline in Argentina as they tear up pasture to grow soy there is a huge opportunity in the making. The EU is shorter than ever in beef and they will/already are relaxing tariffs and increasing quotas. Why does Canada not seize the opportunity and try to ship a small quantity in there and establish a market presence? I suggest it's because our "industry" is controlled by a North American packing cartel more interested in keeping beef captive on this continent as a means to keep ex farm live cattle prices as low as possible.