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Sandhusker, I of course will take great issue to this post. I know Randy S is a fine person. If he said this is how the conversation went, fine. If the ibp buyer actually said he can't offer more because "it screws up pricing on 20k head of formula cattle"…….poor choice of words.

However, the math and wrap up comments of "the effect is this (captive supply / formula cattle) softens bids, and causes lower cash prices" is incorrect. Anytime the word "suppose" and "maybe" is used as many times as this argument, the scrutiny will be heavy.

As of Sept 17, 2002, live cash prices and the CH / Sel spread had increased 6 of the previous 7 weeks. Looks like ibp did a pretty poor job of depressing live prices leading up to 9/17/02. For your assumptions to be correct, you have to assume the ibp buyer was NOT negotiating with Randy. You don't know that, nor the current dynamics that were in place…..other packers bidding on the cattle, etc. Beauty lies in the eye of the beholder, and top quality to Randy may not be what the buyer had in mind. There's lots of good looking cattle out there that producers expect to grade 80% CH, and the buyer knows from previous experience they don't won't hit 50. Instead of wasting time arguing about live animal quality, just price yourself out of the market. Case closed. Isn't the job of the buyer to get the targeted cattle as cheaply as possible?

The single greatest error and where the argument looses creditability is the assumption that a "top of the week" bid on 1000 head triggers that same price on 20k formula cattle. You can't possibly believe that ibp would have a procurement practice in place where the price on 1000 cattle means 20k also get that same price. If this was so, who wouldn't want to sell formula? You have no idea how ibp mathematically arrives at a formula price. Randy also has two closer plant options, Swift at Greeley, CO and Excel at Ft Morgan. CO IBP at Lexington, NE is a good distance from Wheatland WY. Clearly, ibp has lots of cattle options closer to Lex than Wheatland. Whether you're buying green beans, corn or cattle, the farther from home you are, you have to consider freight, and adjust your bids accordingly.

Beefman

<blockquote data-quote="Beefman" data-source="post: 43376" data-attributes="member: 379">Sandhusker, I of course will take great issue to this post.&nbsp; I know Randy S is a fine person.&nbsp; If he said this is how the conversation went, fine. If the ibp buyer actually said he can&#039;t offer more because &quot;it screws up pricing on 20k head of formula cattle&quot;…….poor choice of words. However, the math and wrap up comments of &quot;the effect is this (captive supply / formula cattle) softens bids, and causes lower cash prices&quot; is incorrect.&nbsp; Anytime the word &quot;suppose&quot; and &quot;maybe&quot; is used as many times as this argument, the scrutiny will be heavy. As of Sept 17, 2002, live cash prices and the CH / Sel spread had increased 6 of the previous 7 weeks. Looks like ibp did a pretty poor job of depressing live prices leading up to 9/17/02. For your assumptions to be correct, you have to assume the ibp buyer was NOT negotiating with Randy. You don&#039;t know that, nor the current dynamics that were in place…..other packers bidding on the cattle, etc.&nbsp; Beauty lies in the eye of the beholder, and top quality to Randy may not be what the buyer had in mind.&nbsp; There&#039;s lots of good looking cattle out there that producers expect to grade 80% CH, and the buyer knows from previous experience they don&#039;t won&#039;t hit 50.&nbsp; Instead of wasting time arguing about live animal quality, just price yourself out of the market.&nbsp; Case closed.&nbsp; Isn&#039;t the job of the buyer to get the targeted cattle as cheaply as possible?&nbsp; The single greatest error and where the argument looses creditability is the assumption that a &quot;top of the week&quot; bid on 1000 head triggers that same price on 20k formula cattle. You can&#039;t possibly believe that ibp would have a procurement practice in place where the price on 1000 cattle means 20k also get that same price.&nbsp;&nbsp; If this was so, who wouldn&#039;t want to sell formula?&nbsp; You have no idea how ibp mathematically arrives at a formula price.&nbsp; Randy also has two closer plant options, Swift at Greeley, CO and Excel at Ft Morgan. CO&nbsp; IBP at Lexington, NE is a good distance from Wheatland WY.&nbsp; Clearly, ibp has lots of cattle options closer to Lex than Wheatland.&nbsp;&nbsp; Whether you&#039;re buying green beans, corn or cattle, the farther from home you are, you have to consider freight, and adjust your bids accordingly. Beefman</blockquote>

[QUOTE="Beefman, post: 43376, member: 379"] Sandhusker, I of course will take great issue to this post. I know Randy S is a fine person. If he said this is how the conversation went, fine. If the ibp buyer actually said he can’t offer more because "it screws up pricing on 20k head of formula cattle"…….poor choice of words. However, the math and wrap up comments of “the effect is this (captive supply / formula cattle) softens bids, and causes lower cash prices” is incorrect. Anytime the word "suppose" and "maybe" is used as many times as this argument, the scrutiny will be heavy. As of Sept 17, 2002, live cash prices and the CH / Sel spread had increased 6 of the previous 7 weeks. Looks like ibp did a pretty poor job of depressing live prices leading up to 9/17/02. For your assumptions to be correct, you have to assume the ibp buyer was NOT negotiating with Randy. You don’t know that, nor the current dynamics that were in place…..other packers bidding on the cattle, etc. Beauty lies in the eye of the beholder, and top quality to Randy may not be what the buyer had in mind. There’s lots of good looking cattle out there that producers expect to grade 80% CH, and the buyer knows from previous experience they don't won't hit 50. Instead of wasting time arguing about live animal quality, just price yourself out of the market. Case closed. Isn’t the job of the buyer to get the targeted cattle as cheaply as possible? The single greatest error and where the argument looses creditability is the assumption that a “top of the week” bid on 1000 head triggers that same price on 20k formula cattle. You can’t possibly believe that ibp would have a procurement practice in place where the price on 1000 cattle means 20k also get that same price. If this was so, who wouldn’t want to sell formula? You have no idea how ibp mathematically arrives at a formula price. Randy also has two closer plant options, Swift at Greeley, CO and Excel at Ft Morgan. CO IBP at Lexington, NE is a good distance from Wheatland WY. Clearly, ibp has lots of cattle options closer to Lex than Wheatland. Whether you're buying green beans, corn or cattle, the farther from home you are, you have to consider freight, and adjust your bids accordingly. Beefman [/QUOTE]

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