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Packers Cut Production...Prices To Follow

Mike

Well-known member
ALTHOUGH SUPPLIES ARE TIGHT? :mad: :mad: :mad: :mad:


US beef sector, pinched by costs, cuts production
Published Thursday, December 13, 2007 at 05:19 AMCHICAGO, Dec 12 (Reuters) - Troubles in the U.S. beef industry, notably losses on beef sales, have caused two of the nation's largest producers to cut production from now through at least the end of the year.

Tight supplies of market-ready cattle and high cattle prices combined with abundant supplies of lower-priced pork and chicken have squeezed U.S. beef companies.

No.3 producer JBS-Swift & Co. and No. 4 producer National Beef Packing Co. said on Wednesday they will cut production.

Tyson Foods Inc. < TSN.N >, the No. 1 U.S. beef producer, and Cargill Inc., the No. 2 beef producer, said they have been operating at reduced levels, citing poor market conditions.

Consulting firm HedgersEdge.com said U.S. beef companies, on average, are losing about $45 on every head of cattle they slaughter. With daily slaughter ranging from 125,000 to 130,000 head, that equates to losses of $5.6 million to $5.8 million a day for the industry

Production cutbacks "should have been done months ago," said Rich Nelson, livestock analyst at Allendale Inc.

Supplies of market-ready cattle have been tight for some time due to producers reducing herds because of recent drought in the southern Plains and high feed prices.

Cattle numbers have begun to increase and greater supplies should be available in 2008, but until then supplies should stay tight and prices high, analysts said.

Nelson forecasts it may be March or April of 2008 before supplies increase significantly.

However, because of cutbacks by beef companies, he said cattle prices could drop by the end of this year, possibly to $92 per hundredweight. Cattle traded on Wednesday at $93 to $93.50 in Texas, Oklahoma, and Kansas.

Greeley, Colorado,-based Swift, owned by Brazilian company JBS-Friboi < JBSS3.SA >, said beginning next week it will reduce cattle slaughter by about 15,000 head a week.

"We are going to be running at reduced hours in all plants," JBS-Swift spokesman Marco Sampaio told Reuters.

Swift's beef plant in Dumas, Texas, did not operate on Wednesday. That plant can process up to 6,000 cattle a day.

National Beef, based in Kansas City, Mo, said on Wednesday that beginning this week it will reduce cattle slaughter by 10,000 to 15,000 head per week. It has beef plants in Dodge City and Liberal, Kansas.

"Our decision to reduce hours is driven by unfavorable market conditions resulting in unprecedented losses," Tim Klein, National's president and chief operating officer, said in a statement.

Beef companies are having a hard time selling beef at profitable prices because there is plenty of other meat available, said Don Roose, analyst at U.S. Commodities Inc.

Margins are slim "because beef is at a high price and is having a tough time competing with pork and poultry," said Roose.

At the feedlots, cattle producers have been reluctant to take lower prices because feed prices are much higher this year, boosting the cost of production, said Roose.
 

PORKER

Well-known member
Abundant supplies of lower-priced pork and chicken have squeezed U.S. beef companies.

What a line, first there is no such thing a LOW PRICED growing of pork or Chicken. The feed costs have doubled since last winter. So the meat input cost of growing is squeezing the big vertical operations as feed and ingredients have doubled in price. So they need to buy cheap animals to counter their high priced livestock that is fed high priced grains!
 

PORKER

Well-known member
In a prepared statement issued earlier this month, OCM president Keith Mudd said: "Congress must preserve the pro-market livestock provisions in the Farm Bill, including the prohibition of packer-owned livestock, to return market forces to agriculture. The drastic loss of hog farms will continue in 2008 if the packer lobby strips these provisions."

Stumo pointed out that according to OCM’s research, the per-hog cost to raise an animal to market weight are no different for a 5,000-hog operation as for a 50,000-hog facility. Howeve, "we have lost farmers year after year because they don’t have true market access."

The problem isn’t as acute in the beef industry, the attorney noted, because, "depending on who you believe," packers own only about five percent of the national herd. Moreover, beef production remains stubbornly segmented among cow-calf producers, pasture ranchers and feeders, who then finally sell to packers. In the hog industry there’s little segmentation.

USDA, in the meantime, appears of two minds on the matter of packers owning livestock and influencing the live market. A study completed for the department by RTI International in February 2007 to assess the effects on the market of packer ownership and to examine alternative marketing arrangements found that alternative marketing arrangements provide benefits to livestock producers and to consumers. "Alternative marketing arrangements" are methods by which livestock and meat are transferred through successive stages of production and marketing and can include forward contracting and marketing agreements as well as packer ownership -- but, for the latter, only in conjunction with other segments.
 

Sandhusker

Well-known member
These bastards have announced cutbacks before to drop the price - and then not cut back at all.

I just took a gander at February Fats, they've been coming down since September. I smell a rat.
 

hillsdown

Well-known member
Sandhusker said:
These bastards have announced cutbacks before to drop the price - and then not cut back at all.

I just took a gander at February Fats, they've been coming down since September. I smell a rat.

I can't believe I am agreeing with you but was told the same thing today by a big feedlot owner by me.
 

Kato

Well-known member
I was told today by a fellow who is a major buyer in the hog market in this province that cull boars are worth ONE CENT A POUND. He says a semi load of cull boars @ one cent is worth $500.00. That's for a 50,000 pound load. You can't put fuel in the truck for that. Cull sows are worth 8 cents. He was told that a good sow should be able to lose you about $1,100.00 a year, based on two litters. Up here they are aborting sows to cut their losses.

At this rate, hogs will soon be extinct here. Maybe hog producers too. :shock: When you hear that Hutterite colonies are getting out of pigs, then you know it's bad. Really bad.

The rat you smell smells a lot like a pig. :!: At least we haven't gotten to the point where a calf is less of a loss if it's dead. :roll: :roll:
 
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