Beef market are criminal

[Redone]

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.

[perfecho]

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!

[errolanderson]

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.

[WiltonRanch]

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.

[perfecho]

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."

[errolanderson]

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 skysc****r 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).

[perfecho]

So, when do equities follow in line to where they should be? Or....are they where they should be???
Thanks for the input....

[cottonpicken]

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.

[perfecho]

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.....

[15444]

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.

[bucket]

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.

[bucket]

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...**** 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.

[kato]

Highs and lows

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.

[AlbertaFarmer5]

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.

[errolanderson]

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 . . . .