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Beefman
Member
Joined: 27 Apr 2005
Posts: 245
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 Posted: Sat Jan 28, 2012 7:15 am Post subject: |
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| Sandhusker wrote: |
SH, "...4 major packing companies all needing cattle to keep their operation going are going to have to bid competitively with eachother..."
Eventually, yes - unless they draw on captive supplies or bring trucks from Canada.
The auction deal is easy to understand, if you want to. If you insist on having only 2 bidders, it is easy to come up with an agreement where we let the bids drop, you don't run me up on X and I won't run you up on Y. Nobody else is interested, so it works well. |
I think your ideal situation already exists. Take the last two weeks......asking prices for fed cattle start the week approx $1.27 - $1.28, offers of $1.21-1.22, and the market trades in the $1.25-1.26 area. The market finds an agreeable trading point. Just like your auction of 150 people. Sometimes the market has traded over initial offers. The situation you describe where X and Y have an agreement is called market collusion, and a clear violation of the P&S. Have you checked the color of ink packers have printed lately - pretty deep red. If you remain convinced there is still lots of $$$ being made on the processing side, here's your opportunity......call up the owners of the Tama, IA and the SD plant, and tell them you'd like to lay your cash down. Both have been in the media lately as being close to opening up, yet I'm sure they'd take your check.
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~SH~
Rancher
Joined: 14 Feb 2005
Posts: 5426
Location: South Western SD
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| Posted: Sun Jan 29, 2012 7:45 am Post subject: |
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| Sandhusker: "Eventually, yes - unless they draw on captive supplies or bring trucks from Canada". |
Once again, you don't know what you are talking about Sandhusker.
Captive supply cattle have to be killed when they are ripe, not too early and not too late. They make up a portion of the slaughter just like cattle from the cash market because a particular feeder wanted to forward contract his cattle rather than being forced to sell in the cash market by the "socialized cattle marketing advocates". Should feeders not be allowed to sell through forward contracts? Shouldn't those cattle be killed when they are ready? You make a common business practice into some conspiracy theory on market manipulation.
Whether or not Canadian cattle are purchased depends on whether the Canadians are willing sellers. Don't make the mistake of thinking Canadian cattle can be bought on a whim or bought cheaper than US cattle.
| Quote: |
| Sandhusker: "The auction deal is easy to understand, if you want to. If you insist on having only 2 bidders, it is easy to come up with an agreement where we let the bids drop, you don't run me up on X and I won't run you up on Y. Nobody else is interested, so it works well". |
But that is not the case in the beef packing industry. In the beef packing industry you have 4 -5 major packers (depending on where you draw the line on market share) all needing cattle to keep their chains operating. They either buy the cattle or they continue to pay labor and overhead costs with a reduction in boxed beef sales.
It truly is funny how those who blame packers for this and that don't believe enough in their own conspiracy theories to invest in the packing industry.
THE NEED TO BLAME!
~SH~
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Sandhusker
Rancher
Joined: 10 Feb 2005
Posts: 18244
Location: Nebraska
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