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Questions for OCM on "captive supplies".

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Anonymous

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OCM,

On November 25 of 2002, I asked Bill Bullard the following question:

SH: "If packer concentration and captive supplies are the reasons for low cattle prices, what has changed about either of these two factors to allow prices to go higher recently. What was different in year 2001 that allowed the fat cattle price to get to $82 and yearling price to $92? I mean logic would tell you that if packer concentration and captive supply are holding the market down, that one of those two factors would have to change to allow the market to climb. What is creating the rise in the market?"

To which Bill Bullard replied:

Bullard: "Scott, you are talking specifically about the spike increase that we saw back in April of 2001 in which the cattle prices did top over $80. What's interesting is if you will track what the captive supply levels are at the same time, you will find that the captive supply during that same week we saw $80.00 cattle fell from a 50% level down below 40%, and it has been our contention all along that once those captive supplies hit that 40% level that they have tremendous buying power in the market."


Recently, Chase Carter with OCM stated that 80% of the cattle are currently being sold under a captive supply arrangement.


I have two questions for you OCM:

1. Who is telling the truth here? Either Bullard is making up a story regarding the 40% level or Chase Carter is wrong about 80% of our cattle currently being sold under a captive supply arrangement.

As anyone can plainly see, somebody is lying here or they both are.

2. Assuming that Chase Carter is correct on his 80% figure, if captive supplies have a negative impact on our market, why are we seeing the highest feeder calf prices ever recorded if captive supplies are as high as 80%?

Have fun dancing around those questions.



~SH~
 

Econ101

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SH,

It really doesn't matter the specific number. If the number is high enough that cattle prices can be manipulated the number is too high. The actual number does not necessarily mean that there will be manipulation, which is one of the arguments that you hang your hat on, but that there is a possibility of manipulation of price not on quality reasons, but on other strategic pricing reasons. That is why the first parts of the operative (economic) parts of Section 202 are written the way they are. If ranchers are getting prices that do not reflect the value of their product evenly with differences in quality accounted for, then the economic principles set forth in the PSA are broken. That is against the law. It allows the buyers with market power to strategically use their buying power to give advantages to some over others for the buyer's ultimate benefit. That was the allegation in the Pickett case.

Dance around that all you want, but 12 jurors believed that to be the case and you have argued that it was a conspiracy of 12. There is no set number or rule that with market power there is manipulation. That is a fallacy in your reasoning and not Pickett's argument.

All depressions of price using this mechanism (it can be thought of as an artificial Nash Equilibrium) do not permanently depress prices. They may in the short term. In the long term producers will react to the lower prices and there will be a slide down the supply curve. This slide down the supply curve will eventually cause prices to move higher if demand is relatively inelastic regardless of how much market power there is unless there is some implicit or explicit collusion. That collusion can be encouraged by a player with market power by punishing other buying participants who do not follow in line with the "big boy" through a variety of methods but mainly through a market player setting up this Nash equilibrium to its advantage. Usually this only occurs in the very short term to "teach a lesson" to other market buyers and encourage price leadership and price signalling strategies.

The PSA was originally written in a time where collusion of the main packers cheated farmers out of value through the use of implicit collusion and price leadership. If price signalling and price leadership is used to create lower overall prices there is a violation of the law. This was shown to be true in the Pickett case. Even the apellate judges conceded this point. When there is a violation of the law those who violate the law should pay for the damages. That was what was asked for in the Pickett case.

You have contended that the since there were no excess profits, there was no manipulation. I have already pointed out that by controlling the substitutes, the companies do make extra profit, albeit in the substitutes, not in the beef markets. By giving the benefit of the lower prices to the consumer, there is a slide down the supply curve which will invariably lead to higher prices later. Unfortunately for the beef industry, the supply of the substitutes is much more elastic (you can increase the supply of chicken and pork a whole lot faster than you can beef) and the companies owning these substitutes make their money there. This comes at the expense of beef consumption.

I had this conversation with Chuck Lambert previously and he indicated that overall this did not really hurt the cattleman for just the reason you stated: that the prices of cattle do go up. This does not deter from the fact that individual producers were hurt and the market plays unfairly enriched the oligopsonists at the expense of the farmer. Of course R-Calf looked at the situation and noticed that Tyson was using Canadian beef as a form of captive supply. After the power play on BSE by the USDA that allowed Tyson to gain more market power in Candada, R-CALF decided to make the USDA stick to its original reasons for closing the border- food safety issues.

It seems that you want to bring up the same old arguments for your specious reasoning. An acceptance of those reasons will continue to enslave producers in the USA and Canada with the "big boys" gaining more market share, increasing barriers to entry, and driving out competition of buyers that is so need for the producer to be able to get all of the producer surplus.

Do you want to dance some more?
 

ocm

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~SH~ said:
OCM,

On November 25 of 2002, I asked Bill Bullard the following question:

SH: "If packer concentration and captive supplies are the reasons for low cattle prices, what has changed about either of these two factors to allow prices to go higher recently. What was different in year 2001 that allowed the fat cattle price to get to $82 and yearling price to $92? I mean logic would tell you that if packer concentration and captive supply are holding the market down, that one of those two factors would have to change to allow the market to climb. What is creating the rise in the market?"

To which Bill Bullard replied:

Bullard: "Scott, you are talking specifically about the spike increase that we saw back in April of 2001 in which the cattle prices did top over $80. What's interesting is if you will track what the captive supply levels are at the same time, you will find that the captive supply during that same week we saw $80.00 cattle fell from a 50% level down below 40%, and it has been our contention all along that once those captive supplies hit that 40% level that they have tremendous buying power in the market."


Recently, Chase Carter with OCM stated that 80% of the cattle are currently being sold under a captive supply arrangement.


I have two questions for you OCM:

1. Who is telling the truth here? Either Bullard is making up a story regarding the 40% level or Chase Carter is wrong about 80% of our cattle currently being sold under a captive supply arrangement.

As anyone can plainly see, somebody is lying here or they both are.

2. Assuming that Chase Carter is correct on his 80% figure, if captive supplies have a negative impact on our market, why are we seeing the highest feeder calf prices ever recorded if captive supplies are as high as 80%?

Have fun dancing around those questions.



~SH~
~SH~ ,"Who is telling the truth here? Either Bullard is making up a story regarding the 40% level or Chase Carter is wrong about 80% of our cattle currently being sold under a captive supply arrangement."

Are you serious about this question? Can you not see a difference of three years in the time element? Doesn't the level of captive supply change over time? Can't it be different in 2002 than in 2005? If you ask me if it's raining today and I say yes. Then you ask me the same question a month later and I say no. Am I definitely lying one of those times because I gave a different answer? Captive supply levels change, sometimes rapidly. Are these guys talking about a high week, a monthly average, a yearly average or what? If you don't know (and you have provided no context for me to know) then you can't determine what size of time element is being talked about by either one.


~SH~ ,"Assuming that Chase Carter is correct on his 80% figure, if captive supplies have a negative impact on our market, why are we seeing the highest feeder calf prices ever recorded if captive supplies are as high as 80%?"
I have yet to hear ANYONE claim that captive supply levels are the ONLY element affecting cattle prices. Your question ASSUMES this to be the case. You are presenting a straw man argument. This is one of your normal logic flaws.
 
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Anonymous

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OCM: "Are you serious about this question? Can you not see a difference of three years in the time element? Doesn't the level of captive supply change over time? Can't it be different in 2002 than in 2005? If you ask me if it's raining today and I say yes. Then you ask me the same question a month later and I say no. Am I definitely lying one of those times because I gave a different answer? Captive supply levels change, sometimes rapidly. Are these guys talking about a high week, a monthly average, a yearly average or what? If you don't know (and you have provided no context for me to know) then you can't determine what size of time element is being talked about by either one."

Oh come on OCM, don't be such a blind follower. There is no way in hell that the level of captive supply has went from 40% to 80% in three years. I knew you would try to defend both of them.

Chase Carter and Bill Bullard are both wrong!

First, formula and grid cattle are not captive supply. It was deceivers like you that included formula and grid cattle in the captive supply numbers to try to add credibility to your bogus market manipulation claim.

Formula and grid cattle are not owned or otherwise controlled by packers for more than 14 days prior to slaughter so they cannot be included in the captive supply numbers. The Johnson Amendment that you guys championed also contained the 14 day designation.

You didn't think anyone would notice did you?

Chase is flat wrong from that standpoint which is why he throws out the 80% level which would have to include formula and grid cattle. Bill Bullard is wrong about his magical 40% captive supply level. He just pulled that out of his......hat.

Second, true captive supply levels, packer owned cattle and forward contract cattle, have remained relatively stable in these years. For example, Swift has stayed at around 40%. Meanwhile, prices have advanced 60% in one year alone blowing Bullard's baseless theory.

There is no basis for the captive supply conspiracy theory and never has been. This is the type of bullsh*t these guys throw out to producers who trust these guys to tell them the truth.

Pickett lost because they couldn't support their position with facts and neither can you or Kindergarten economics.


OCM: "I have yet to hear ANYONE claim that captive supply levels are the ONLY element affecting cattle prices. Your question ASSUMES this to be the case."

BINGO!

So how can either of these men claim any level of market manipulation without considering all the factors that affect markets?

When I asked my question to Bill Bullard, Johnny Smith, and Mike Callicrate, I called back in and asked the same question and got a different answer the next time. KNOW WHY???

Because these guys make it up as they go.


Kindergarten economics: "The actual number does not necessarily mean that there will be manipulation, which is one of the arguments that you hang your hat on, but that there is a possibility of manipulation of price not on quality reasons, but on other strategic pricing reasons."

Kindergarten economics: "All depressions of price using this mechanism (it can be thought of as an artificial Nash Equilibrium) do not permanently depress prices. They may in the short term."

Nobody earns a conviction on "THE POSSIBILITY OF MARKET MANIPULATION".

Who's dancing?


Kindergarten economics: "If ranchers are getting prices that do not reflect the value of their product evenly with differences in quality accounted for, then the economic principles set forth in the PSA are broken. That is against the law. It allows the buyers with market power to strategically use their buying power to give advantages to some over others for the buyer's ultimate benefit. That was the allegation in the Pickett case."

Which was never proven!


Kindergarten economics: "If price signalling and price leadership is used to create lower overall prices there is a violation of the law. This was shown to be true in the Pickett case. Even the apellate judges conceded this point. When there is a violation of the law those who violate the law should pay for the damages. That was what was asked for in the Pickett case."

It was not shown to be true in the Pickett case. Dropping your price as your needs are met is not and never will be market manipulation. If it was, it would have consequences at every level of this industry.

There was no proof provided to back the market manipulation allegation. That's why the Pickett verdict was tossed out on it's ars. That's why you have to create the illusion that there actually evidence presented to back the conspiracy rather than presenting that evidence.


Kindergarten economics: "I had this conversation with Chuck Lambert previously and he indicated that overall this did not really hurt the cattleman for just the reason you stated: that the prices of cattle do go up. This does not deter from the fact that individual producers were hurt and the market plays unfairly enriched the oligopsonists at the expense of the farmer."

With your history of taking peoples statements out of context, I am not about to trust you to quote a former NCBA representative correctly now.


Kindergarten economics: "Of course R-Calf looked at the situation and noticed that Tyson was using Canadian beef as a form of captive supply. After the power play on BSE by the USDA that allowed Tyson to gain more market power in Candada, R-CALF decided to make the USDA stick to its original reasons for closing the border- food safety issues."

It was R-CULT that prolonged the situation in Canada where Canada had more cattle than slaughter capacity giving the Canadian packer leverage over the situation.

R-CULT wanted to stop Canadian imports because they thought it had a much bigger impact than it actually had. They wanted to hurt a few Canadian producers in a large way to help themselves financially in a small way.

The fact that the Canadian border is opened now and we are seeing cattle prices at $8 - $10 / cwt higher than last year with a closed Canadian border should show a lot of cattlemen how R-CULT has been misleading them on the impact of Canadian imports. This fact alone blows your Canadian captive supply argument clean out of the water but go ahead and try defending it. I would expect nothing less from a fellow "illusionist".


Kindergarten economics: "It seems that you want to bring up the same old arguments for your specious reasoning. An acceptance of those reasons will continue to enslave producers in the USA and Canada with the "big boys" gaining more market share, increasing barriers to entry, and driving out competition of buyers that is so need for the producer to be able to get all of the producer surplus."

Woe is me, there is no hope, the end is near, we're all doomed, please government save us from ourselves, join R-CULT today.

ZZZZZZZZZZZZZzzzzzzzzzzzzzzzzz!

Highest cattle prices ever recorded with the same level of packer concentration, virtually the same level of "LEGITIMATE" captive supplies, and an opened Canadian border.

Who needs more proof of just how full of sh*t R-CULT really is?


R-CULT director Herman Schumacher was recently asked about the cattle prices. He correctly stated cheap corn as one factor but incorrectly credited R-CULT for higher cattle prices by keeping the Canadian border closed for awhile. My friend who told me about this said he couldn't believe his ears then Herman repeated it. THE BORDER IS OPENED NOW HERMAN so why wouldn't the markets reflect that fact????

It's simple, these guys make it up as they go with no basis in fact. The Canadian border never did have the impact these guys wanted to believe and now we have the proof. When the Canadian border was opened to boxed beef, which is around 50% of pre BSE imports, fat cattle prices continued to rally. More proof of R-CULT's ignorance.

Why anyone continues to believe this lying outfit is beyond me.



~SH~
 

Econ101

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SH:
Quote:
Kindergarten economics: "The actual number does not necessarily mean that there will be manipulation, which is one of the arguments that you hang your hat on, but that there is a possibility of manipulation of price not on quality reasons, but on other strategic pricing reasons."


Quote:
Kindergarten economics: "All depressions of price using this mechanism (it can be thought of as an artificial Nash Equilibrium) do not permanently depress prices. They may in the short term."


Nobody earns a conviction on "THE POSSIBILITY OF MARKET MANIPULATION".

Pickett proved it to 12 jurors where it counts in America (or is supposed to). I use the term possibility because the potential for the exercise of market power does not mean that it will always be excerised. There are MANY ethical and non law-breaking companies in our economy. That is just the conclusion you continually err on.

Quote:
Kindergarten economics: "If ranchers are getting prices that do not reflect the value of their product evenly with differences in quality accounted for, then the economic principles set forth in the PSA are broken. That is against the law. It allows the buyers with market power to strategically use their buying power to give advantages to some over others for the buyer's ultimate benefit. That was the allegation in the Pickett case."


Which was never proven!

That is just your packer luvin interpretation of events. Pickett proved it to 12 jurors. Do you disagree?

SH:
Quote:
Kindergarten economics: "If price signalling and price leadership is used to create lower overall prices there is a violation of the law. This was shown to be true in the Pickett case. Even the apellate judges conceded this point. When there is a violation of the law those who violate the law should pay for the damages. That was what was asked for in the Pickett case."


It was not shown to be true in the Pickett case. Dropping your price as your needs are met is not and never will be market manipulation. If it was, it would have consequences at every level of this industry.

There was no proof provided to back the market manipulation allegation. That's why the Pickett verdict was tossed out on it's ars. That's why you have to create the illusion that there actually evidence presented to back the conspiracy rather than presenting that evidence.

It was proven to the 12 jurors. Are you saying that there was a conspiracy of 12 jurors? To use your term "there are no facts to the contrary" offered by the judges reviewing the case.

There are a lot of school teachers who allow pupils in their class to cheat by glancing away when it is done. The better grades that these students get are not a result of being more knowledgeable or knowing the subject better. Were you one of those students?

SH:

With your history of taking peoples statements out of context, I am not about to trust you to quote a former NCBA representative correctly now.
What statements? When you keep pulling stuff like this out of your butt your begin to stink.


SH:
Quote:
Kindergarten economics: "Of course R-Calf looked at the situation and noticed that Tyson was using Canadian beef as a form of captive supply. After the power play on BSE by the USDA that allowed Tyson to gain more market power in Candada, R-CALF decided to make the USDA stick to its original reasons for closing the border- food safety issues."


It was R-CULT that prolonged the situation in Canada where Canada had more cattle than slaughter capacity giving the Canadian packer leverage over the situation.

R-CULT wanted to stop Canadian imports because they thought it had a much bigger impact than it actually had. They wanted to hurt a few Canadian producers in a large way to help themselves financially in a small way.

The fact that the Canadian border is opened now and we are seeing cattle prices at $8 - $10 / cwt higher than last year with a closed Canadian border should show a lot of cattlemen how R-CULT has been misleading them on the impact of Canadian imports. This fact alone blows your Canadian captive supply argument clean out of the water but go ahead and try defending it. I would expect nothing less from a fellow "illusionist".
Are you saying that additional supply from cattle does not affect the suppy/demand equilibrium and hence the price? If you are then you are arguing that there is currently market failure in the beef industry.

SH:
Quote:
Kindergarten economics: "It seems that you want to bring up the same old arguments for your specious reasoning. An acceptance of those reasons will continue to enslave producers in the USA and Canada with the "big boys" gaining more market share, increasing barriers to entry, and driving out competition of buyers that is so need for the producer to be able to get all of the producer surplus."


Woe is me, there is no hope, the end is near, we're all doomed, please government save us from ourselves, join R-CULT today.

ZZZZZZZZZZZZZzzzzzzzzzzzzzzzzz!

Highest cattle prices ever recorded with the same level of packer concentration, virtually the same level of "LEGITIMATE" captive supplies, and an opened Canadian border.

Who needs more proof of just how full of sh*t R-CULT really is?

It has ALWAYS been my contention that the abuse of captive supplies and the price suppression it brings is a slide down the supply curve. Slides like this make the market swing more (higher highs, lower lows) which benefits the current packers in two ways:

1) There is more money to be made in the substitutes when prices are high,

2) There is more money to be made in importation of foreign meat sources (another form of substitute for American producers).

3) Barriers to entry are increased for new competitors when the gains in price suppression are given back to the consumers. This allows the giant agribusinesses employing these tactics to gain more market power at a cheaper cost.

All of these things have happened to the detriment of the Amerecan producer and to the gain of the giant agribusinesses that employ these economic plays. Do you deny this to be the case?


SH, go ahead and spew the garbage out that you do. You gain stature in these arguments only with the man in the mirror.
 
A

Anonymous

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Kindergarten: "Pickett proved it to 12 jurors......"

Pickett proved nothing!

If Pickett actually proved something you would be able to BRING THAT PROOF!

You won't because you can't!

Pickett convinced 12 jurors, that didn't understand the evidence, that their bogus market manipulation conspiracy theories, such as the price falling as your needs are met, had merit but the far more legal savy judges and 11th circuit saw right through Pickett's bullsh*t conspiracy theory.


Kindergarten: "Are you saying that additional supply from cattle does not affect the suppy/demand equilibrium and hence the price? If you are then you are arguing that there is currently market failure in the beef industry."

Where the hell did that come from?

Making it up as you go again huh?


Kindergarten economics: "It has ALWAYS been my contention that the abuse of captive supplies and the price suppression it brings is a slide down the supply curve. Slides like this make the market swing more (higher highs, lower lows) which benefits the current packers in two ways:

1) There is more money to be made in the substitutes when prices are high,

2) There is more money to be made in importation of foreign meat sources (another form of substitute for American producers).

3) Barriers to entry are increased for new competitors when the gains in price suppression are given back to the consumers. This allows the giant agribusinesses employing these tactics to gain more market power at a cheaper cost.

All of these things have happened to the detriment of the Amerecan producer and to the gain of the giant agribusinesses that employ these economic plays. Do you deny this to be the case?"

There is no abuse of captive supplies. That is nothing more than a baseless bullsh*t conspiracy theory that you and your fellow anti corporate packer blamers cannot and will not prove. No matter how many times you keep repeating this crap, it will not miraculously become fact without supporting proof. You have proved nothing and you never will. All you can do is talk cheap talk!


Kindergarten economics: "SH, go ahead and spew the garbage out that you do. You gain stature in these arguments only with the man in the mirror."

More cheap talk with nothing to support it. Same-O, Same-O factually void kindergaten economics. King of the cheap talkers!


~SH~
 

Econ101

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SH:
There is no abuse of captive supplies. That is nothing more than a baseless bullsh*t conspiracy theory that you and your fellow anti corporate packer blamers cannot and will not prove. No matter how many times you keep repeating this crap, it will not miraculously become fact without supporting proof. You have proved nothing and you never will. All you can do is talk cheap talk!

That was not the opinion of 12 jurors, (your "no facts to the contrary" saying next.) Your opinion is just that.

I have something to do right now but I will continue your education later. I am not going to charge you tuition as I now have a little insight to your supplementary income source as noted on the bottom of my posts.
 

ocm

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~SH~ You seem to think you have a successful argument when all you have done is set up a straw man.

Tell me this. Were the figures Carter and Bullard gave annual averages, quarterly, monthly, a single week or what. Did they both cover the same amount of time? I don't think you have that information and you are drawing conclusions based on ignorance. So tell me. What amount of time do their figures cover?


As for you captive supply vs market manipulation, your position is that captive supply either causes ALL market variability or NONE of it. You have argued that since it does not cause ALL of then it causes NONE of it. That is absurd.

You obviously never passed a class in logic.

Bruce Bass said in court that as captive supplies go up, prices go down. According to Bruce Bass, captive supply levels affect prices. Did he lie in court.
 
A

Anonymous

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Hahaha!

You throw out a "red herring" to divert the issue and accuse me of setting up a strawman. Hilarious!

The time period is irrelevant to Bill Bullard's claim that captive supplies affect the market when they reach above the 40% level. Chase Carter claims they are at the 80% level. Chase made that claim about a month ago. Since you are so in tune with OCM, why don't you ask Chase Carter what time period he was referring to if you think it's relevant. Then tell me what the cattle market was when captive supplies reached the 80% level and try defending Bullard's bullsh*t captive supply 40% conspiracy theory. You'll fall flat on your face.

BILL BULLARD SAID CAPTIVE SUPPLIES AFFECT THE MARKET WHEN THEY REACH ABOVE THE 40% LEVEL. CHASE CARTER SAYS THEY ARE AT THE 80% LEVEL. IF BOTH ARE RIGHT, HOW CAN WE HAVE THE HIGHEST CALF PRICES EVER RECORDED????

Go ahead and try to defend this blatant stupidity. The blind leading the blind. You go man!


OCM: "As for you captive supply vs market manipulation, your position is that captive supply either causes ALL market variability or NONE of it. You have argued that since it does not cause ALL of then it causes NONE of it. That is absurd."

Tell me oh wise one, what variables allow captive supplies to affect the markets at some times and not at others??? If Chase Carter knows what he's talking about, obviously an 80% captive supply level hasn't affected our markets.

Go ahead, I'd like to see you try to present an argument to try to defend this bullsh*t captive supply conspiracy theory. You'll divert because you can't defend it because it doesn't add up.

Just like you would have a hard time defending R-CULT's claim that last years calf markets were a result of a closed Canadian border to live cattle when the border is now open and calf prices are $8 - $10 /cwt higher than last year. Go ahead, try defending that bullsh*t story too.


OCM: "Bruce Bass said in court that as captive supplies go up, prices go down. According to Bruce Bass, captive supply levels affect prices. Did he lie in court."

Well whoopdi do! As Tyson meets their needs, the price goes down, IMAGINE THAT????

As the order buyers in the salebarns fill their orders, the price goes down.

"GASP", IT'S MARKET MANIPULATION AT THE SALE BARNS!!

Same stupid logic.

As cattlemen's bull needs are met, the price they pay goes down.

"GASP, MORE MARKET MANIPULATION"

Same stupid logic!


Like I told kindergarten economics, dropping your price as your needs are met is not market manipulation. If it is, the same rules must apply to order buyers and producers.



~SH~
 

agman

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ocm said:
~SH~ You seem to think you have a successful argument when all you have done is set up a straw man.

Tell me this. Were the figures Carter and Bullard gave annual averages, quarterly, monthly, a single week or what. Did they both cover the same amount of time? I don't think you have that information and you are drawing conclusions based on ignorance. So tell me. What amount of time do their figures cover?


As for you captive supply vs market manipulation, your position is that captive supply either causes ALL market variability or NONE of it. You have argued that since it does not cause ALL of then it causes NONE of it. That is absurd.

You obviously never passed a class in logic.

Bruce Bass said in court that as captive supplies go up, prices go down. According to Bruce Bass, captive supply levels affect prices. Did he lie in court.

Captive supply totals are a reflection of total supply. Total supply drives the price trend therefore it would not be illogical to say that captive supply, being part o the total supply drives prices. They are interlinked.
 

ocm

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agman said:
ocm said:
~SH~ You seem to think you have a successful argument when all you have done is set up a straw man.

Tell me this. Were the figures Carter and Bullard gave annual averages, quarterly, monthly, a single week or what. Did they both cover the same amount of time? I don't think you have that information and you are drawing conclusions based on ignorance. So tell me. What amount of time do their figures cover?


As for you captive supply vs market manipulation, your position is that captive supply either causes ALL market variability or NONE of it. You have argued that since it does not cause ALL of then it causes NONE of it. That is absurd.

You obviously never passed a class in logic.

Bruce Bass said in court that as captive supplies go up, prices go down. According to Bruce Bass, captive supply levels affect prices. Did he lie in court.

Captive supply totals are a reflection of total supply. Total supply drives the price trend therefore it would not be illogical to say that captive supply, being part o the total supply drives prices. They are interlinked.

But not percentages.
 
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Anonymous

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Come on OCM,

These are your boys! Lets see you defend their positions.

Bring it!



~SH~
 

Econ101

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agman said:
ocm said:
~SH~ You seem to think you have a successful argument when all you have done is set up a straw man.

Tell me this. Were the figures Carter and Bullard gave annual averages, quarterly, monthly, a single week or what. Did they both cover the same amount of time? I don't think you have that information and you are drawing conclusions based on ignorance. So tell me. What amount of time do their figures cover?


As for you captive supply vs market manipulation, your position is that captive supply either causes ALL market variability or NONE of it. You have argued that since it does not cause ALL of then it causes NONE of it. That is absurd.

You obviously never passed a class in logic.

Bruce Bass said in court that as captive supplies go up, prices go down. According to Bruce Bass, captive supply levels affect prices. Did he lie in court.

Captive supply totals are a reflection of total supply. Total supply drives the price trend therefore it would not be illogical to say that captive supply, being part o the total supply drives prices. They are interlinked.


Agman, I would agree with that statement. That is why the wording of the PSA part a, b, and c is the way it is. If IBP did not pay the same for cattle on the cash market as it did in the captive supply for strategic reasons of lowering the price and not quality or value reasons, then they broke the law. That was what the jury came up with. SH has arguments that because they were a week apart in purchase, then they did not necessarily have to be the same. Strategic pricing (and illegal pricing) in this case would be for IBP to pay less for the same quality characteristics to the cash market as the captive supply for cattle of essentially the same delivery date. If they ever "punished" one of the other smaller market buyers after price signalling and price leadership techniques previously discussed then they certainly enhanced their market power over some "magic number" threshold SH wants to pin down. Any action by IBP in this regard of strategic "punishing" of smaller competitors also violates the PSA but because the act was written with an "and" between all of enumeration of violations and not an "or" was incorrectly ruled by the appellate court.

Captive supply was not the culprit. Abuse of that captive supply for strategic pricing was the culprit.

How would the captive supply price ever drive prices up if they were based on the cash price? They just thinned the market so price manipulation could happen.
 

Murgen

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Agman, I would agree with that statement. That is why the wording of the PSA part a, b, and c is the way it is. If IBP did not pay the same for cattle on the cash market as it did in the captive supply for strategic reasons of lowering the price and not quality or value reasons, then they broke the law. That was what the jury came up with. SH has arguments that because they were a week apart in purchase, then they did not necessarily have to be the same. Strategic pricing (and illegal pricing) in this case would be for IBP to pay less for the same quality characteristics to the cash market as the captive supply for cattle of essentially the same delivery date.

Maybe someone can explain to me how you get the same "value" by buying on average, from an unknown seller, compared to buying a known quality/quantity from a known seller. The "value", being the ability of going back to a known source for a known quality/quantity. That "value" could be argued to be efficiency. An efficiency that is not available in the cash market.

In any court case, you would have to first determine the definition of "value".
 

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Murgen said:
Agman, I would agree with that statement. That is why the wording of the PSA part a, b, and c is the way it is. If IBP did not pay the same for cattle on the cash market as it did in the captive supply for strategic reasons of lowering the price and not quality or value reasons, then they broke the law. That was what the jury came up with. SH has arguments that because they were a week apart in purchase, then they did not necessarily have to be the same. Strategic pricing (and illegal pricing) in this case would be for IBP to pay less for the same quality characteristics to the cash market as the captive supply for cattle of essentially the same delivery date.

Maybe someone can explain to me how you get the same "value" by buying on average, from an unknown seller, compared to buying a known quality/quantity from a known seller. The "value", being the ability of going back to a known source for a known quality/quantity. That "value" could be argued to be efficiency. An efficiency that is not available in the cash market.

In any court case, you would have to first determine the definition of "value".

Murgen, I don't have any problem at all with the concept you bring up. If the price for "captive" supplies set the market price instead of following the cash price your case would be made more easily. That is exactly why when looking at this question I asked about the "captive" supply pricing structure so it could be compared to what was offered in the cash market at the same time period.

The same time period is really important here. Differences in demand (wanting more lean some years or more fat in others) should be allowed to occur. These changes in demand happen over the longer term, not the short term. A company can not use the excuse one week, for example, that consumer demand is for lean and then the next week it is for fats. That could be a clear sign of the packers using made up changes in consumer demand to manipulate the cash market. This could be the result of a non-transparent market where the packers would use their knowledge and inventory strategically to depress the cash market artificially. Transparency is important for markets to work efficiently.

Efficient markets should send the kind of price signals to producers to produce what the demand is, not used as an excuse to manipulate the markets or "punish" other buyers for not following the price leader. As you can see, the devil is in the details and that is probably why there was so much evidence that was scrutinized both before and during the trial. You bring up some good questions that should have been addressed at the trial. From what others (Mike) has posted, these issues were addresed by the attorneys for the plaintiffs.

What do you think?
 

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Murgen, I don't have any problem at all with the concept you bring up. If the price for "captive" supplies set the market price instead of following the cash price your case would be made more easily. That is exactly why when looking at this question I asked about the "captive" supply pricing structure so it could be compared to what was offered in the cash market at the same time period.

So how does following the Cash market price set the price, in the same time period?
 

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Murgen said:
Murgen, I don't have any problem at all with the concept you bring up. If the price for "captive" supplies set the market price instead of following the cash price your case would be made more easily. That is exactly why when looking at this question I asked about the "captive" supply pricing structure so it could be compared to what was offered in the cash market at the same time period.

So how does following the Cash market price set the price, in the same time period?

By following the cash price all of the supply in captive supply has no way to push prices up. It allows the packer to "capture" the supply it needs without that demand affecting the price.

If price supression through the use of market power was used you would see packers trying to get more cattle in the captive supply agreements even if the cash market was less for the comparable product. This would indicate that strategic pricing of cattle was being employed instead of getting supply at the lowest price through the cash market. This strategy would ultimately lower the cash price one week and suppress the cattle market for as long as the packer employing the strategy had the market power, captive supply, and/or inventory of boxed beef to "punish" any of the smaller buyers for not following the price leader. That is abuse of market power and why a, b, and c was written in the operative part of the act, Section 202 of the PSA. When market participants get prices related to these type of pricing strategies instead of true supply/demand factors there is a degree of market failure. Ultimately there is also a deadweight loss.

The PSA is not really an "old" law. It is based on economic concepts that have been known for at least a thousand years and probably double that. The law does not describe what unfair, deceptive, or other terms mean, because truth is not found in mere words.

Go ask Jesus why he taught in parables.
 
A

Anonymous

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Kindergarten,

The more you post, the more you reveal your complete lack of understanding of this issue. All you are doing is repeating what you heard. You can't even compose an original thought.


Kindergarten: "If IBP did not pay the same for cattle on the cash market as it did in the captive supply for strategic reasons of lowering the price and not quality or value reasons, then they broke the law."

"IF" says it all! That's all you have is "IFs"!

That's bullsh*t because this week's cash price is driven by this week's supply and demand factors and that is not necessarily going to be the same as next week's cash price or last week's cash price. This week's non negotiated formula and grid price is based on last week's cash price, not this week's cash price. The two will not necessarily be the same. Why can't you get that through your thick head? How many times do I have to tell you that?

If feeders do not like the non negotiated base price formula and grid options, they can sell to Angus Gene Net with a negotiated base price or they can sell in the cash market. They don't need an arrogant individual like you to save them from their own pricing mechanisms.


Kindergarten: "SH has arguments that because they were a week apart in purchase, then they did not necessarily have to be the same."

That is a fact that you will not refute!


Kindergarten: "Strategic pricing (and illegal pricing) in this case would be for IBP to pay less for the same quality characteristics to the cash market as the captive supply for cattle of essentially the same delivery date."

That is absolutely bogus. You just don't get it. This week's formula and grid cattle non negotiated base price is based on LAST WEEK'S cash price, NOT THIS WEEK'S. Last week's cash price was based on last week's supply and demand factors which drove last week's boxed beef prices. This week's cash price is based on this week's supply and demand fators which drive this week's boxed beef prices. THE TWO WILL NOT NECESSARILIY BE THE SAME BECAUSE THEY ARE PRICED A WEEK APART. Why can't you get that through your thick uneducated head?


Kindergarten: "If they ever "punished" one of the other smaller market buyers after price signalling and price leadership techniques previously discussed then they certainly enhanced their market power over some "magic number" threshold SH wants to pin down."

Another "IF" to prove you cannot substantiate your claims.


Kindergarten: "Captive supply was not the culprit. Abuse of that captive supply for strategic pricing was the culprit."

The culprit is arrogant packer blamers like you that are spreading bogus captive supply market manipulation conspiracy theories thinking you need to save the feeding industry from themselves.


Kindergarten: "How would the captive supply price ever drive prices up if they were based on the cash price? They just thinned the market so price manipulation could happen."

Captive supplies do not drive the cash market. NORMAL SUPPLY AND DEMAND FACTORS DRIVE THE CASH MARKET. Dropping your price as your needs are met is not market manipulation. It's a normal function of supply and demand.

You don't have a clue what you are talking about.


BTW, formula and grid cattle are not captive supply cattle because they are not owned or otherwise controlled by packers for more than 14 days prior to slaughter. Even the packer blamer's Johnson Amendment correctly defined captive supplies.

Once again you show your ignorance to the world by simply repeating what you have heard instead of composing an original thought.




~SH~
 
A

Anonymous

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Kindergarten: "By following the cash price all of the supply in captive supply has no way to push prices up. It allows the packer to "capture" the supply it needs without that demand affecting the price."

You are so full of it!

HOW DO YOU EXPLAIN THE FACT THAT CASH MARKETS MOVE HIGHER EVEN WHEN PACKERS FILL THEIR NEEDS WITH FORMULA AND GRID CATTLE?????

HOW DO YOU DENY THE OBVIOUS?????

The formula and grid price doesn't drive anything. The cash price is driven by normal supply and demand factors and doesn't have a damn thing to do with the formula and grid price.

One packer filling his needs with formula and grid cattle does not mean the other packers have done the same. You act like there is only one packer out there. You don't have a clue!


Kindergarten: "If price supression through the use of market power was used you would see packers trying to get more cattle in the captive supply agreements even if the cash market was less for the comparable product."

THE PACKER DOESN'T MAKE THAT DETERMINATION BY HIMSELF. HE HAS TO HAVE A WILLING SELLER. A WILLING SELLER THAT DOESN'T NEED YOU TO SAVE HIM FROM HIS OWN PRICING MECHANISMS.


Kindergarten: " This would indicate that strategic pricing of cattle was being employed instead of getting supply at the lowest price through the cash market. This strategy would ultimately lower the cash price one week and suppress the cattle market for as long as the packer employing the strategy had the market power, captive supply, and/or inventory of boxed beef to "punish" any of the smaller buyers for not following the price leader. That is abuse of market power and why a, b, and c was written in the operative part of the act, Section 202 of the PSA. When market participants get prices related to these type of pricing strategies instead of true supply/demand factors there is a degree of market failure. Ultimately there is also a deadweight loss."

Cash cattle prices are driven by normal supply and demand factors within the market. Always have been, always will be. None of your bogus market manipulation conspiracy theories will change that. Pickett lost becasue they couldn't prove market manipulation and neither can you.


Kindergarten: "Go ask Jesus why he taught in parables."

Jesus knew what he was talking about, you obviously don't!


~SH~
 

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