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Packer Margins Still In The Black

Mike

Well-known member
The latest beef packer margin index from HedgersEdge.com is at a plus $50.80 per head, compared with the previous index of $51.95.

Meanwhile......Feeder losses have been in the red since early 2007. Some say $130-$140.00 per/hd in the red.

What's wrong with this picture?
 

Sandhusker

Well-known member
Mike said:
The latest beef packer margin index from HedgersEdge.com is at a plus $50.80 per head, compared with the previous index of $51.95.

Meanwhile......Feeder losses have been in the red since early 2007. Some say $130-$140.00 per/hd in the red.

What's wrong with this picture?

The main problem is that JBS isn't here yet - they're going to make everything better. :roll:
 

mrj

Well-known member
Sandhusker contributes his usual negative content to the discussion.....again

More reasonably, it could be because there are too many people in the cattle/beef business who won't move away from the usual mode of taking their profits from another segment of the industry.

A true value added system where each of us adds a specific value to the animal or carcass and is paid accordingly instead of feeding off the guy ahead or behind us in the chain from farm gate to consumer plate, makes more sense.

Of course some will put that idea down because it is promoted by NCBA.

mrj
 

Sandhusker

Well-known member
"A true value added system where each of us adds a specific value to the animal or carcass and is paid accordingly instead of feeding off the guy ahead or behind us in the chain from farm gate to consumer plate, makes more sense."

That is exactly what Creekstone is trying to do. You contradict yourself once again.
 
A

Anonymous

Guest
If you're watching Superior today- the future doesn't look too rosy...
Altho they are selling southern cattle which are usually cheaper- I haven't seen anything weighing between 500- 650 go a $1.00.... :(

Nice looking char cross steers weighing 650-- brought $.97-- some lots of lighter ones down in the $.90's and heifers in the $.80's.....

I don't know how- with the huge increase of input costs- these producers can make a go of it with prices like that :???: :( .....
 

per

Well-known member
mjr, doesn't the beginning guy on the chain create value for the chain? Without the poor first link guy there is no chain.
 

RobertMac

Well-known member
per said:
mjr, doesn't the beginning guy on the chain create value for the chain? Without the poor first link guy there is no chain.

But money flows from the consumer back down the chain...the poor first link guy is the last to see it.
 

RobertMac

Well-known member
mrj said:
A true value added system where each of us adds a specific value to the animal or carcass and is paid accordingly instead of feeding off the guy ahead or behind us in the chain from farm gate to consumer plate, makes more sense.

Makes sense to Tyson...that's why they are the whole chain in poultry! :shock:
 

Sandhusker

Well-known member
RobertMac said:
mrj said:
A true value added system where each of us adds a specific value to the animal or carcass and is paid accordingly instead of feeding off the guy ahead or behind us in the chain from farm gate to consumer plate, makes more sense.

Makes sense to Tyson...that's why they are the whole chain in poultry! :shock:

Makes sense to JBS as well. You buy the packing link and the feeding link and you control the first link as well without buying a single cow or acre of pasture because those who do own the cows and ranches have no other option but to take your price or eat their own. OOOOPS, there I go with my inflamatory language and my opinion again. Sorry, MRJ. :lol: :lol: :lol: :lol:
 

pointrider

Well-known member
I recently saw a piece on TV about all the wind turbines that are dotting the landscape in West Texas cattle country. One rancher told the reporter he doesn't like them and is concerned about having to deal with the turbines and look at them all the time if the industry loses it subsidies and pulls out. When asked what he sees by the reporter, another rancher said, "A changing world."

When we consider energy prices, grain prices, ethanol subsidies and all the rest, perhaps we should be talking about the changing world more and looking at the present for new opportunities. For example, more grass-fed cattle. The demand for grass-fed beef is growing, and JBS certainly has a lot of experience in processing and marketing grass-fed beef. They have markets for it all over the world.

And another factor that will change the global landscape in favor of grass-fed beef even more is the new FMD test announced in Australia. When this test is put in place and used extensively in places like Brazil, they will produce and market even more grass-fed beef.

I believe that more ranchers in the U.S. need to be looking around and trying to figure out how to participate profitably in grass-fed programs. Today's economic and consumer-driven trends seem to make that a worthwhile adventure into the future.
 

Big Muddy rancher

Well-known member
pointrider said:
I recently saw a piece on TV about all the wind turbines that are dotting the landscape in West Texas cattle country. One rancher told the reporter he doesn't like them and is concerned about having to deal with the turbines and look at them all the time if the industry loses it subsidies and pulls out. When asked what he sees by the reporter, another rancher said, "A changing world."

When we consider energy prices, grain prices, ethanol subsidies and all the rest, perhaps we should be talking about the changing world more and looking at the present for new opportunities. For example, more grass-fed cattle. The demand for grass-fed beef is growing, and JBS certainly has a lot of experience in processing and marketing grass-fed beef. They have markets for it all over the world.

And another factor that will change the global landscape in favor of grass-fed beef even more is the new FMD test announced in Australia. When this test is put in place and used extensively in places like Brazil, they will produce and market even more grass-fed beef.

I believe that more ranchers in the U.S. need to be looking around and trying to figure out how to participate profitably in grass-fed programs. Today's economic and consumer-driven trends seem to make that a worthwhile adventure into the future.


While I would really like to agree on all points I see high price of land as a major sticking point to profitable grass based production on a large scale. looking to the future maybe if we raise smaller amounts of beef the price might rise but then will only the wealthy afford it?
 

pointrider

Well-known member
I believe there is a strong possibility that, if grain prices stay high and all of the other factors I mentioned continue on the same path for a few years, that "corn-fed beef" will become a niche market. Feeders cannot continue to lose money year after year. Ranchers cannot afford to be paid even less for calves that have no place to go but a feed yard. Packers, like all other large businesses, will continue to want to be profitable. So, what's an industry to do? If corn-fed beef continues to be offered to consumers, then the price will have to go up which will push it more and more to the niche status. And maybe that's okay if other types of beef are being offered more and more for those who can't pay the price for the corn-fed beef, especially if the other types continue to improve.

The question is, who is going to produce "the other beef?" If U.S. ranchers cannot figure out how to do that, then "the other beef" will come from places like Brazil where the beef industry is still expanding.

I believe there will be fewer U.S. ranchers 10 years from now, but I also believe that many of those remaining will be figuring out how to do what they need to do to keep going in the industry. More than one rancher has already bought into ranching operations in Brazil. How far are you willing to go to stay in the industry?
 

pointrider

Well-known member
This just hit my computer screen:

http://news.yahoo.com/s/ap/20080622/ap_on_bi_ge/midwest_flooding_food_prices

Have you scheduled your next company meeting yet?
 

RobertMac

Well-known member
Interesting post, Pointrider. I didn't go 100% grassfed ten years ago to avoid high prices of fuel, feed, and fertilizer...but it sure has worked out well!!! :)

A subliminal message in your post is the vulnerability of a consolidated commodity industry that is based on ONE methodology to achieve efficiency and lowest cost. When the major inputs to that system double in cost, something has got to give. Retail price is capped by competing meats and consumer budget strains. The only place this system can get relief is paying less for inputs...calves from cow/calf producers. Isn't it logical that packers(led by JBS) will ramp up pressure on Congress to open trade with SA to access cheaper calves to "save the industry"?

This should also make cow/calf producers think more about taking their profit in the wholesale/retail segment rather than at their ranch gate!!!!

More diversification with more smaller branded beef programs(that producers service and/or are directly involved) is our best option...if we had it!!!!!! :mad:
 

Mike

Well-known member
June 23, 2008

The latest beef packer margin index from HedgersEdge.com is at a plus $62.80 per head, compared with the previous index of $57.50.
 

Mike

Well-known member
June 25, 2008

The latest beef packer margin index from HedgersEdge.com is at a plus $78.35 per head, compared with the previous index of $68.45.
 
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