Are Cattle Prices High Because of "Tight Supply"?

[Econ101]

(NOT an article from Me) Here is the link with graphics: http://www.lmic.info/memberspublic/InTheCattleMarket.html

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December 5, 2005

Darrell R. Mark, Ph.D.

Asst. Professor, Department of Agricultural Economics, University of Nebraska



Canadian Cattle Imports Up, But Prices Remain Strong



Weekly data on the number of feeder and slaughter cattle imported from Canada since trade resumed in late July 2005 through November 26, 2005 reveals that after a gradual initial increase, imports of Canadian cattle are higher than the 2000-2002 average. Figure 1 shows that feeder cattle imports have been consistently higher than the 3-year historical average before the trade ban. In fact, during this 19 week time period (July 23 to Nov 26), feeder cattle imports from Canada were 169,701, up 89% from the 2000-02 average. However, this year's feeder imports thus far are 25.9% lower compared to 2002 when record Canadian feeder cattle were imported due to drought in Canada,. While weekly feeder cattle imports have been almost consistently higher than the historical average, slaughter cattle imports remained below its historical average until October. Figure 2 shows that fed cattle imports during August and September were generally between 10,000 and 12,000 head per week, compared to an historical weekly pace between 15,000 and 20,000. While Canadian fed cattle imports were higher than the average during October, it appears that fed imports may be beginning their seasonal decline for December. For the 19 week period of imports during 2005, fed cattle imports have totaled 239,075 head, 25.5% lower than the 2000-02 average.



Weekly import data does not include all live cattle imports and is subject to revision in monthly trade data. Because September is the most recent monthly trade data available, weekly and monthly data can only be compared for August and September. Doing so suggests that total cattle imports (feeder and slaughter cattle) from Canada are substantially higher than the weekly data in Figures 1 and 2 suggest.



While the return of live cattle imports to normal or above-normal levels has likely resulted in some pressure on feeder cattle and fed cattle prices, it is also important to keep the magnitude of the trade impact and current price levels in mind. Historically, the average Canadian feeder and slaughter cattle imports from 2000-02 accounted for 2.77% of U.S. federally inspected slaughter. That might have caused prices to be 4-5%, or $3-4/cwt, lower than they otherwise would have been, everything else being equal. So far in 2005, total feeder and fed cattle imports from Canada have been equal to 3.15% of U.S. slaughter. This would likely translate to a 4.5-5.5%, or $3.50-4.50/cwt, price impact, close to the historical level. However, because most of the feeder cattle imports have not yet been finished and slaughtered, it is likely that the price impact so far is actually smaller.



Despite higher live cattle imports, price levels for feeder and slaughter cattle have remained strong in the U.S. The table below shows that current prices for fed cattle are over $2 higher than last year, and likely higher than many forecasted for the fourth quarter. Prices for yearling steers are also up compared to last year: about $12/cwt in both Kansas and Nebraska. Similarly, steer calf prices are $13/cwt higher than last year in Kansas and Nebraska. So, even with the higher Canadian cattle imports, tight domestic cattle supplies and relatively good retail beef demand have apparently supported cattle prices.













The Markets


Fed cattle prices averaged about $1/cwt higher in Kansas last week, with live weight prices at mostly $92-92.50/cwt. Nebraska dressed trade averaged $4.70/cwt higher at $148.42/cwt. Last week, Choice boxed beef prices declined $0.23/cwt from the previous week, while the Choice-Select widened $0.23 to $10.35/cwt. Feeder cattle prices were about $1-3 higher last week in Nebraska and Kansas compared to the week before Thanksgiving.






Last Week


Previous Week


Last Year

Kansas Fed Steer Price, live weight


$92.10


$91.09


$89.90

Neb. Fed Steer Price, dressed weight


$148.42


$143.72


$140.68

700-800 lb. Feeder Steer Price, Kansas 4 market average


$118.56


NA


$106.45

500-600 lb. Feeder Steer Price, Kansas 4 market average


$133.40


NA


$120.95

700-800 lb. Feeder Steer Price, Neb. 7 market average


$122.92*


NA


$110.87

500-600 lb. Feeder Steer Price, Neb. 7 market average


$140.55


NA


$127.25

Choice Boxed Beef Price, 600-900 lb. carcass


$150.80


$151.03


$145.38

Choice-Select Spread, 600-900 lb. carcass


$10.35


$10.12


$5.68

* Calves

 

[Jason]

So what point are you trying to make from this article?

 

[Econ101]

So what point are you trying to make from this article?

Agman wants to denegrate my "tight" supplies language and call me an idiot for this language I use in describing the market. If it is a product of an "illusion" then it is an illusion shared by others than just myself. Sometimes reality is the collective "illusion" that we all have. This was in part the philosphy that Kafka expressed. That is the reason 12 jurors who do not have a bias are the determinants of "reality" and not people like Agman who have their own profit oriented agendas.

Jason, I don't expect you to understand any of this.

The article, if you go to the website, does put into perspective the trade that Canada has with the U.S. Jason, your arguments and market influence and those of Tam, BMR, Murgen, and the rest of the Canadians on this website, comprise only a small part U.S. consumption of beef. That is not to say that the use of Canadian beef is not important when it comes to market manipulation. It can be considerable.

I don't agree completely with Mark's on every aspect of the article, but it does have some good data in it that can be useful in looking at the situation.

 

[Anonymous]

Conman: "The article, if you go to the website, does put into perspective the trade that Canada has with the U.S. Jason, your arguments and market influence and those of Tam, BMR, Murgen, and the rest of the Canadians on this website, comprise only a small part U.S. consumption of beef. That is not to say that the use of Canadian beef is not important when it comes to market manipulation. It can be considerable."

Canadian imports comprise only a small part of U.S. consumption of beef BUT THE MARKET MANIPULATION CAN BE CONSIDERABLE????

PROVE IT CHEAP TALKER!


~SH~

 

[Econ101]

Conman: "The article, if you go to the website, does put into perspective the trade that Canada has with the U.S. Jason, your arguments and market influence and those of Tam, BMR, Murgen, and the rest of the Canadians on this website, comprise only a small part U.S. consumption of beef. That is not to say that the use of Canadian beef is not important when it comes to market manipulation. It can be considerable."

Canadian imports comprise only a small part of U.S. consumption of beef BUT THE MARKET MANIPULATION CAN BE CONSIDERABLE????

PROVE IT CHEAP TALKER!


~SH~

Will you give a donation to BIG C if I do?

Were you able to get your reading glasses on and read "tight supplies" in the text? Is it in there?

 

[Anonymous]

Where is your proof that the market manipulation can be considerable?


~SH~

 

[Econ101]

Where is your proof that the market manipulation can be considerable?


~SH~

So you want another "free" education? You have a few answers to give before I do that.

 

[agman]

So what point are you trying to make from this article?

Agman wants to denegrate my "tight" supplies language and call me an idiot for this language I use in describing the market. If it is a product of an "illusion" then it is an illusion shared by others than just myself. Sometimes reality is the collective "illusion" that we all have. This was in part the philosphy that Kafka expressed. That is the reason 12 jurors who do not have a bias are the determinants of "reality" and not people like Agman who have their own profit oriented agendas.

Jason, I don't expect you to understand any of this.

The article, if you go to the website, does put into perspective the trade that Canada has with the U.S. Jason, your arguments and market influence and those of Tam, BMR, Murgen, and the rest of the Canadians on this website, comprise only a small part U.S. consumption of beef. That is not to say that the use of Canadian beef is not important when it comes to market manipulation. It can be considerable.

I don't agree completely with Mark's on every aspect of the article, but it does have some good data in it that can be useful in looking at the situation.

Pardon me but you are an idiot, you don't even know what the supplies are of have been in the past. Supplies declined in 2004, the second largest annual decline on record as I previous stated. This is now 2005 and beef production is up .3% and net supplies are marginally higher due to increased imports. Price will be higher this year than last year. The advance from the low in 1998-2003 was virtually all demand derived. But you don't know how to measure demand so you are up the creek again without a paddle.

Per your totally foolish and incorrect statement "prices can't go up unless supply goes down". Is that so genius, then why did prices of cattle go up when beef production went up? Your statement only displays how inept you are in understanding supply/demand principles, economics and the very basics of the beef industry. Everyone else has already figured out you don't know what you are talking about so why have you not figured the out yet? Does your own interpretation of your perceived intellectual level get confused with reality? You evidently like to pose naked as you have been fully undressed and exposed for a very long time. You fool no one but yourself!!!! You are a laugh a day with your misguided posts.

 

[Econ101]

So what point are you trying to make from this article?

Agman wants to denegrate my "tight" supplies language and call me an idiot for this language I use in describing the market. If it is a product of an "illusion" then it is an illusion shared by others than just myself. Sometimes reality is the collective "illusion" that we all have. This was in part the philosphy that Kafka expressed. That is the reason 12 jurors who do not have a bias are the determinants of "reality" and not people like Agman who have their own profit oriented agendas.

Jason, I don't expect you to understand any of this.

The article, if you go to the website, does put into perspective the trade that Canada has with the U.S. Jason, your arguments and market influence and those of Tam, BMR, Murgen, and the rest of the Canadians on this website, comprise only a small part U.S. consumption of beef. That is not to say that the use of Canadian beef is not important when it comes to market manipulation. It can be considerable.

I don't agree completely with Mark's on every aspect of the article, but it does have some good data in it that can be useful in looking at the situation.

Pardon me but you are an idiot, you don't even know what the supplies are of have been in the past. Supplies declined in 2004, the second largest annual decline on record as I previous stated. This is now 2005 and beef production is up .3% and net supplies are marginally higher due to increased imports. Price will be higher this year than last year. The advance from the low in 1998-2003 was virtually all demand derived. But you don't know how to measure demand so you are up the creek again without a paddle.

Per your totally foolish and incorrect statement "prices can't go up unless supply goes down". Is that so genius, then why did prices of cattle go up when beef production went up? Your statement only displays how inept you are in understanding supply/demand principles, economics and the very basics of the beef industry. Everyone else has already figured out you don't know what you are talking about so why have you not figured the out yet? Does your own interpretation of your perceived intellectual level get confused with reality? You evidently like to pose naked as you have been fully undressed and exposed for a very long time. You fool no one but yourself!!!! You are a laugh a day with your misguided posts.

Agman, you are the one who denegrated my "tight supplies" language. You are starting to show your tell again. Are you backing away from that now that I have posted two sources that support this. You have only cheap talk.

You do like to take my comments out of context so that you can win an argument, don't you? Post my whole paragraph, and not one little snippet. It will probably show your lack of reading comprehension skills and your frog-like jumping to conclusions that have become so familiar on this forum.

Again, all we have from you is cheap talk with no supporting evidence while I have brought mine. Isn't that ironic? You are a laugh a day.

By the way, did you make some secret poll behind closed doors to get your "Everyone else has already figured out you don't know what you are talking about..." supporting evidence? Maybe your delusions are self induced also.

 

[flounder]

Livestock Market Reporting: USDA Has Taken Some Steps to Ensure Quality, but Additional Efforts Are Needed. GAO-06-202, December 9


http://www.gao.gov/cgi-bin/getrpt?GAO-06-202


Highlights -


http://www.gao.gov/highlights/d06202high.pdf



TSS

 

[Econ101]

So the GAO says that the AMS and GIPSA are not sharing information because of a legal technicality? No surprise there. With the current packer backers in the U.S. Senate Judiciary and elsewhere, packers are able to get away with anything.

The AMS was partly legislated to make the packers comply with reporting prices to provide transparency for the market. If the USDA continually suspends fines for not doing that, where is the enforcement mechanism? GIPSA could not get the data required to do a price manipulation case against Tyson/IBP under JoAnn Waterfield. What is she doing over there still? McBride and Waterfield need to go work for their captors, the packers.

It is apparent that the USDA has little intention of making the packers comply with any of the laws that give them advantage that they do not want to follow. Can you say CAPTIVE AGENCY? A little campaign money goes a long way on the hill. Politicians will just as soon selll out farmers and cattle producers---if they can get away with it.

 

[Anonymous]

Conman you said, "prices can't go up unless supplies come down".

Those are your own ridiculous words. Nobody else said it. Nobody else tried to defend it. There is no way to take that statement out of context unless you can show where it was followed by "unless consumers are willing to pay more for the existing supplies" which would have made that statement even more bizzare since that (consumers being willing to pay more for existing supplies) happens all the time. That was not the case!

Answer Agman's question. Why have cattle prices went up as beef production went up?

How do you explain that in light of your statement?

Don't try to slime your way around it by claiming that you have been taken out of context or the whole paragraph wasn't posted, yada, yada, waaaaah. That's bullsh*t!

There is no way to take that statement out of context. The fact is, you are so ignorant about these issues that you think that supplies is the only factor that drives cattle prices rather than a willingness of consumers to spend more money on what beef supplies are out there.

That shows what a complete idiot you really are. Who do you think you are fooling at this point?

This stupid statement would be added to your list of stupid statements that you cannot defend. It's one thing to be uninformed about beef industry issues, it's quite another to act like you are informed when you can't even understand the most basic concepts of supply and demand.

You are a complete phony. The PM's I have received would suggest that many are figuring that out. Why don't you do yourself a favor and self evaluate. You probably wouldn't be such a bad person if you didn't pretend to know so much more than you do.

If you were a college professor, I would demand your resignation. I shudder to think that idiots like you are misleading students with your garbage.



~SH~

 

[Econ101]

Conman you said, "prices can't go up unless supplies come down".

Those are your own ridiculous words. Nobody else said it. Nobody else tried to defend it. There is no way to take that statement out of context unless you can show where it was followed by "unless consumers are willing to pay more for the existing supplies" which would have made that statement even more bizzare since that (consumers being willing to pay more for existing supplies) happens all the time. That was not the case!

Answer Agman's question. Why have cattle prices went up as beef production went up?

How do you explain that in light of your statement?

Don't try to slime your way around it by claiming that you have been taken out of context or the whole paragraph wasn't posted, yada, yada, waaaaah. That's bullsh*t!

There is no way to take that statement out of context. The fact is, you are so ignorant about these issues that you think that supplies is the only factor that drives cattle prices rather than a willingness of consumers to spend more money on what beef supplies are out there.

That shows what a complete idiot you really are. Who do you think you are fooling at this point?

This stupid statement would be added to your list of stupid statements that you cannot defend. It's one thing to be uninformed about beef industry issues, it's quite another to act like you are informed when you can't even understand the most basic concepts of supply and demand.

You are a complete phony. The PM's I have received would suggest that many are figuring that out. Why don't you do yourself a favor and self evaluate. You probably wouldn't be such a bad person if you didn't pretend to know so much more than you do.

If you were a college professor, I would demand your resignation. I shudder to think that idiots like you are misleading students with your garbage.



~SH~

Go ahead, SH, post the whole paragraph. I'm goading you.

 

[Anonymous]

Conman: "Go ahead, SH, post the whole paragraph. I'm goading you."

Did you say "prices can't go up unless supplies come down".

Yes or No?

~SH~

 

[Econ101]

Post the paragraph, SH, unless you are just scared of the "proof".

 

[Anonymous]

Did you say "prices can't go up unless supplies come down".

Yes or No?

Answer the question!


~SH~

 

[Econ101]

When the markets have an oversupply, yes. They can also go up because of demand increases. To say everything is attributable to shifts in demand negates the beauty of supply and demand equilibriums and why they provide the best answer to economic questions.

Do you need this explained to you?

 

[pointrider]

POP QUIZ

Is it possible for the average price received for a commodity to go up if the total supply of that commodity does not change and the demand for that total number of pounds of commodity does not change?

If you think it can, provide an example of how and when it can happen.

 

[Anonymous]

SH (previous): "Did you say "prices can't go up unless supplies come down"."

Yes or No?

Conman (in response): "When the markets have an oversupply, yes. They can also go up because of demand increases."

Why did you ask me to quote the whole paragraph if you admitted to saying it?

BUSTED AGAIN!


Thank you for confirming your ignorance by answering the question with classic political double talk!

You are flat wrong! Prices can go up when supplies go up because demand is a "PRICE/QUANTITY" relationship. Something you are obviously too ignorant to understand. Agman clarified this for me a long time ago.

You can have increasing supplies and increasing demand simultaneously due to the consumers willingness to pay more for beef despite the increase in supply. What consumers are willing to pay for beef runs independent of supplies. If consumer demand remains steady and supplies increase then yes, the prices will fall. Prices do not always fall as supplies increase as you implied.

CONSIDER YOURSELF CORRECTED AGAIN!


~SH~

 

[Econ101]

SH (previous): "Did you say "prices can't go up unless supplies come down"."

Yes or No?

Conman (in response): "When the markets have an oversupply, yes. They can also go up because of demand increases."

Why did you ask me to quote the whole paragraph if you admitted to saying it?

BUSTED AGAIN!


Thank you for confirming your ignorance by answering the question with classic political double talk!

You are flat wrong! Prices can go up when supplies go up because demand is a "PRICE/QUANTITY" relationship. Something you are obviously too ignorant to understand. Agman clarified this for me a long time ago.

You can have increasing supplies and increasing demand simultaneously due to the consumers willingness to pay more for beef despite the increase in supply. What consumers are willing to pay for beef runs independent of supplies. If consumer demand remains steady and supplies increase then yes, the prices will fall. Prices do not always fall as supplies increase as you implied.

CONSIDER YOURSELF CORRECTED AGAIN!


~SH~

SH, you haven't corrected me yet. When you do, I will let you know. You like to make little arguments with yourself so you can win an argument. That is the only way you can win.

Prices do not always fall as supplies increase as you implied.

I implied nothing of the sort. If I remember correctly, I was talking about a particular part of the cattle cycle where oversupply was the problem that led to decreased prices. When the supply of those cattle is reduced, the market prices will go up. From 1989 to the present, the consumption of beef per capita has been relatively stable based on the retail cut equivalent. Because of many variables, the price paid to the cattlemen has been much more erratic during that same time period. You can not pin everything on demand as Agman does. It is just a convenient out.

Price spreads, inventory control, whether or not the items were used as loss leaders at the stores, prices of substitutes, and a whole lot more go into the value that cattlemen recieve for their product.

When supplies are tight, you will have less margin on the packer side because the packers are actually competing with each other for those cattle. When supplies are not tight, you will more than likely see the price manipulation schemes being played out and the packer margins increase.

Have you done the math on the substitution of chicken for beef yet?