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Long Term Effects of Blood Bath in Fed Cattle

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Brad S
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Re: Long Term Effects of Blood Bath in Fed Cattle

Postby Brad S » Tue Aug 23, 2016 11:36 am

Texas & Traveler, you raise one of the most important issues in the industry. How to fairly price cattle, and I'm fresh out of an answer. I feel like the recent insolvency for feeders has a lot to do with inaccurate if not manipulated price discovery. I used to live across the river from old Doug Wildin - a fantastic intellect. He's campaigned for 40 years about short sellers driving down the market. His plan was, you can't short what you don't own. I asked him if it's that easy, let's just go long up the market? Doug promised me we didn't have strong enough hands.

In between the cowman and the packer has been the feeder. The feeder has been sodomised almost to extinction. I wonder if the cowman will suffer similarly when we have 4% more cows and sustainably priced corn.

We used to have a small local packer called Winchesters. They needed us and we needed them and the arrangement worked. There were hundreds of local packers in the beef belt, and I think beef was a better product. CAB & USPB are a solid effort to offset consolidation.

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Re: Long Term Effects of Blood Bath in Fed Cattle

Postby Angus 62 » Tue Aug 23, 2016 3:57 pm

I guess the question is why would anyone be surprised by any of this? The problems of unbridled packer concentration, captive supply cattle, lack of transparency in the market, complete and total disregard for the Packers and Stockyards Act have been completely ignored by some of the groups who are supposed to be representing cattle producers best interest.

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Re: Long Term Effects of Blood Bath in Fed Cattle

Postby PPRM » Wed Aug 24, 2016 8:28 pm

Brad S wrote: I wonder if the cowman will suffer similarly when we have 4% more cows and sustainably priced corn.


I buy and feed cows. Hopefully opens, but, if not, I calve them out. I am not seeing any glut of cows. Certainly the Slaughter cow end of this seems pretty strong to me right now
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Re: Long Term Effects of Blood Bath in Fed Cattle

Postby 4Diamond » Sat Sep 03, 2016 3:14 pm

What do we think now? .90 fats? Even cheaper?

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Re: Long Term Effects of Blood Bath in Fed Cattle

Postby Angus 62 » Sat Sep 03, 2016 9:31 pm

The next question is will prices get low enough to start triggering liquidation. I know guys that paid over $3000 for bred heifers a couple years back. $500-$600 calves will take a long time to make that investment pay, and we aren't far away.

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Re: Long Term Effects of Blood Bath in Fed Cattle

Postby PPRM » Sun Sep 04, 2016 6:01 am

Angus 62 wrote:The next question is will prices get low enough to start triggering liquidation. I know guys that paid over $3000 for bred heifers a couple years back. $500-$600 calves will take a long time to make that investment pay, and we aren't far away.



Those are the guys that will be hurt by this market.

I'm in enough disbelief of the drop from $2.00 to $1.75 or less on the rail to stop making predictions. It might be time to buy soon though and feed for the April Fat market?
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Re: Long Term Effects of Blood Bath in Fed Cattle

Postby 4Diamond » Sun Sep 04, 2016 6:05 am

Yes I think several bankers will force liquidation. I know of a local guy who loaded up on 2600-$3000 cows and he's about to starve to death now. But his current solution is to keep buying so he can lower his average. It's gonna get ugly for some before it's over.

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Re: Long Term Effects of Blood Bath in Fed Cattle

Postby Texan » Sun Sep 04, 2016 6:12 am

4Diamond wrote:What do we think now? .90 fats? Even cheaper?

Maybe even cheaper. Early in this thread, I thought the June fat deal was probably a safe buy in the !.04-1.05 range. Now, what is it? 97.75 - so much for my ability to forecast correctly.

My biggest worry when we wonder how low it can go is what happens with a global recession/depression. The macro economy is a house of cards - not just in this country, but the whole world. Look at the Hanjin bankruptcy and some of the other global shipping. Things are bad and there's only so long that central banks and rosy forecasts from media and government agencies can prop things up. Personally, I don't see how we can even get through the first quarter without things getting ugly.

So...when we wonder how low they can go, we have to consider the possibility of a global meltdown that will make 2008 look like good times. I think we're close enough to that to measure the time in months instead of years. That could easily mean fats into the 70's.

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Re: Long Term Effects of Blood Bath in Fed Cattle

Postby Angus 62 » Sun Sep 04, 2016 6:47 am

I question how much of what is happening is fundamental (increasing cow numbers, competition from other protein sources, etc.) and how much is pure manipulation. We know the futures market is likely broken and has very little connection to reality any longer. We know there is little in the way of true market reporting. We know that captive supply cattle allow packers to stay out of the market for considerable periods which as much as anything puts a sense of panic in a downward market. I have a friend who is a banker and he says there really aren't as many cattle out there as the market seems to indicate. Even a year ago the projection was that it would take until 2018 for cattle prices to start serious decline. It is not like everyone in the beef business is losing money. Packer and retail profits are very healthy.

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Re: Long Term Effects of Blood Bath in Fed Cattle

Postby Big Muddy rancher » Sun Sep 04, 2016 12:19 pm

Here is a market report, Sold yearling strs Friday, These are Canadian dollars
780lbs at $186, Last year same weight at $284, the year before same wt $245.
Looks to me like the cattle market is experiencing reverse inflation. To bad machinery and taxes would have the same thing happen
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Re: Long Term Effects of Blood Bath in Fed Cattle

Postby Faster horses » Mon Sep 05, 2016 1:25 pm

Big Muddy rancher wrote:Here is a market report, Sold yearling strs Friday, These are Canadian dollars
780lbs at $186, Last year same weight at $284, the year before same wt $245.
Looks to me like the cattle market is experiencing reverse inflation. To bad machinery and taxes would have the same thing happen


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Re: Long Term Effects of Blood Bath in Fed Cattle

Postby mytfarms » Mon Sep 12, 2016 10:32 pm

Gentleman I work around down here echo the same sentiment in terms of a disconnect between the cash market and the traders. A fairly big volume cattle buyer tells me the story they are selling is numbers are back up, but he says the timeline and the numbers he's seeing traded in the cash market aren't supporting that story. It's all algorithms driving the prices he thinks. That and government reports.

The more fiscal responsibility I assume, the more everything in the world feels like a Big Brother conspiracy. Kind of wonder if I'll see a milk cow and a garden being the only way to feed a family in my lifetime if this facade ever crashes.
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