#1 - During the period of time that Tyson manipulated the market prices by using captive supplies and paid less than they should have paid for cattle according to the plaintiffs, why did the plaintiffs sell their cattle to Tyson or anyone else if they felt they were not getting what they should have gotten for those cattle? Perhaps more of the argument should have been directed toward the auction barns and feedlots that sold "too cheap" instead of finding buyers who were willing to pay the "correct" price. If, on the other hand, there were no other buyers out there willing to pay more than Tyson, then was Tyson's price really unfair?
#2 - Where can we get an actual example of what the cattle were sold for that were sold "too cheap" and what those cattle should have brought? This is probably in the transcript which I have not read. Somebody had to have some numbers to come up with a total amount of damage being claimed. An average would do for now. On the average how much per pound were the cattle undervalued during the period of time used in the suit, and how much of that came out of the cow-calf producers' pockets as opposed to the feedlots?
Pointrider,
The bottom line is that fat cattle need to be sold when they are ripe. If they are not sold when they are ripe a number of things happen. First, you start to get into Yield Grade 4 or higher which devalues the cattle. Second, your cost of gain has a point of diminishing returns. Third, you are backing cattle up and creating more tonnage on the market all of which contribute to lower prices.
With that said, you are right in that feeders have many marketing options available to them. They can sell these cattle in the cash market, they can sell them on the formula or grid. They can forward contract them.
They have those choices with many packing companies.
There was no justification for a lawsuit.
The problem you have is these packer blamers do not understand basic market fundamentals. Consumer demand, U.S. beef production, export demand, import contributions to supply, Beef prices relative to pork and poultry, discretionary consumer spending that is available to buy beef, etc. etc.
These guys credit a lack of imports for higher cattle prices and market manipulation conspiracy theories for lower cattle prices.
It's really unfortunate but most of it comes down to plain old ignorance and the need to blame.
I have not seen any price comparisons for what others were paying at that time but your point is well taken. It would be nice to know what the going market was for that time.
These guys allege that Tyson determines the market and that the other packers follow. If one is to believe that, then one is to believe that there is no competition between the major packers. If one is to believe that, then one has to believe that they just have "periods of generosity" when markets move higher and that live cattle prices trending with boxed beef prices is a figment of your imagination.
What I can tell you is that the PER HEAD PROFITS for ibp/Tyson for this period of "ALLEGED" market manipulation was $26 per head. What does that tell you? This is the most efficient packer in their time of profitability.
I can also tell you that if you take that profit times the number of cattle they slaughtered, it is no where near the $1.28 "BILLION" dollar damages that were assessed to them.
I can also tell you that Judge Strom's instructions to the jurors was that before they could reach a guilty verdict they had to agree that ibp lacked a legitimate business reason for using captive supplies. The plaintiffs testified to the contrary so how could the jury possibly have understood the judge's instructions to reach their verdict?
Between the plaintiffs and their witnesses, those guys had utilized forward contracts and sold cattle on the grid. The ultimate hypocrisy.
The whole thing was a joke.
~SH~