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SH and Sandhusker

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Sandhusker: "The price of oil changes daily despite OPEC controlling the world's supply."
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Since we are talking about the cattle/beef industry, who controls the worlds supply of cattle??

SH (previous): "How many packers do you see investing in land, livestock, and machinery"
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Sandhusker (in response): "Why would they? If you own the 10 yards of bridge, you control the 100 miles of road."
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5 major packers control 10 yards of bridge that can be easily purchased by the equity in land, livestock, and machinery if those who own the land, livestock, and machinery believe the toll at those 5 bridges is all too high and all the same price. Is that the case? Of course it's not or we wouldn't have some of the highest fat cattle prices on record which absolutely destroys your empty market control theory just as the empty arguments in Pickett didn't hold water either.

Doesn't matter how badly you want to believe packers can manipulate the markets, they are awarded the same "PRESUMPTION OF INNOCENSE" in court as anyone else.

Current fat cattle prices would suggest to any but the most passionate packer blamers that packers are not very good at manipulating the markets or colluding with their competition to hold down markets.

Market manipulation conspiracy theorists are nothing more than a cancer upon this industry. They've accomplished nothing but being an advocate for socialized cattle marketing where there is no incentive for better cattle. Luckily, there is more that want to move forward than those who want to move backward.


~SH~
 
Econ 101 (Tex): "sh, at any time anyone has the chance to break the law and speed. It doesn't mean they do it all the time. I think if there was a little more enforcement, they wouldn't speed so much".
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Oh, I see, so 5 major packers who are all competing for the same cattle to keep their employees paid and their plants operating can pick and choose when they can manipulate the markets. I bet they can even pick and choose what consumers are going to be willing to pay for beef on any given day too can't they. Good grief!

Why didn't Future Beef manipulate the markets rather than going broke? Did the other packers know some market manipulation tricks they didn't?

Sometimes the obvious (current fat cattle markets) is just too obvious for someone bent on blaming packers.


~SH~
 
~SH~ said:
Sandhusker: "OPEC"
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Apples and oranges.

For the second time, who controls the worlds supply of cattle?


~SH~
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OPEC is a clear example that a controlled market's prices will fluctuate. Just because you don't like that doesn't change the fact that economic law is universal.
 
Sandhusker: "OPEC is a clear example that a controlled market's prices will fluctuate."
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FOR THE THIRD TIME, WHO CONTROLS THE WORLD'S SUPPLY OF CATTLE?


~SH~
 
~SH~ said:
Sandhusker: "OPEC is a clear example that a controlled market's prices will fluctuate."
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FOR THE THIRD TIME, WHO CONTROLS THE WORLD'S SUPPLY OF CATTLE?


~SH~
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I think most people care about who controls the price, SH.

Tex
 
Tex: "I think most people care about who controls the price, SH."
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So my question to you Econ 101 is, how is a price being controlled when fat cattle markets fluctuate as they do?

Are we in a period of packer generosity?



~SH~
 
~SH~ said:
Tex: "I think most people care about who controls the price, SH."
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So my question to you Econ 101 is, how is a price being controlled when fat cattle markets fluctuate as they do?

Are we in a period of packer generosity?



~SH~
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I think the meat packers are scared silly with these GIPSA rules and the higher price is showing that when there is a real sheriff in town, not a pretend one, they will tow the line.

Tex
 
Tex: "I think the meat packers are scared silly with these GIPSA rules and the higher price is showing that when there is a real sheriff in town, not a pretend one, they will tow the line."
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As opposed to decreased beef supplies.
As opposed to increased consumer demand for beef.
As opposed to increased exports.

Yeh, the increase in fat cattle prices has to be related to the GIPSA FACTOR!!

You are so clueless. Wait, weren't you the one who said, "prices can't go up unless supplies go down"? Now your ridiculous logic makes sense.


~SH~
 
howzitgoinboyz

I don't know who said that God controls the worlds supply of cattle, but that was enough for me to join in on the fun.

I really think that the price and supply of beef are controlled by the media like almost every other commodity on the planet.

I originally thought it was a bad idea when fat cattle prices started trading on paper --- or computer screens these days. But the way that our whole bloody world, and especially our wonderful North American culture "reacts" maybe it's not such a bad thing.

So Fear drives price Scotty and Fear controls the supply as well.

God - on the other hand Tex looks after all of us.
 
The only thing controlling fat cattle prices, which is no control at all, is foreign and domestic beef demand (relative to competitive meat demand) vs. foreign and domestic beef supplies just like it's been forever and ever and always will be.

There is no OPEC controlling the cattle markets which is why Sandhusker diverted my question, as always.


~SH~
 
Maybe some of you experts can explain to me why if concentration is so good I would have to haul my cattle over one thousand miles to deliver on a futures contract?? The price would make no difference I would go bankrupt on the shrink. So for me the whole market ie futures and options are out the window. So I am locked out of business as it is done today. I own cattle and I'm a speculator.
 
~SH~ said:
The only thing controlling fat cattle prices, which is no control at all, is foreign and domestic beef demand (relative to competitive meat demand) vs. foreign and domestic beef supplies just like it's been forever and ever and always will be.

There is no OPEC controlling the cattle markets which is why Sandhusker diverted my question, as always.


~SH~
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Looks like my OPEC comment was either over your head or you're playing stupid again. There is no denying that OPEC controls the world's oil markets. Yet that market has price fluctuations. Therefore, to suggest that a controlled market can't have price fluctuations is ignorant.
 
Sandhusker said:
~SH~ said:
The only thing controlling fat cattle prices, which is no control at all, is foreign and domestic beef demand (relative to competitive meat demand) vs. foreign and domestic beef supplies just like it's been forever and ever and always will be.

There is no OPEC controlling the cattle markets which is why Sandhusker diverted my question, as always.


~SH~
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Looks like my OPEC comment was either over your head or you're playing stupid again. There is no denying that OPEC controls the world's oil markets. Yet that market has price fluctuations. Therefore, to suggest that a controlled market can't have price fluctuations is ignorant.
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"Looks like my OPEC comment was either over your head or you're playing stupid again."

I think this is a perfect example where "and" works much better than "or".

Tex
 
To make it sound so simple that supply is controlled by demand makes the whole American dream null and void Scotty. Why would anyone get into business if they did not think they could control at least a little bit of outcome. And why would companies like Cargill or Tyson want to become the multinational giants that they are if they did not think that size could could have some influence over profit and control.

Thank goodness people like to choose is all I can say. All structures are unstable and the current multinational stronghold on the beef cattle industry is no exception.

But those of us who are challenging that status quo need to learn what we already know. We can't help tear it down with negatives. Only proactive and determined effort will do.

Got any buddies looking to invest a few million in a packing plant in Canada these days anyone. We are so close, but fear of the big bad multinational is still holding investment back a bit. :)
 
cedardell - futures and options do not require delivery of anything. You can sell wherever you like. Here's an article to explain things. http://agecon.uwyo.edu/RiskMgt/marketrisk/Hedgingusinglivestockfuture.pdf
I'm no expert, but have used these tools to manage risk.
 
LCP said:
cedardell - futures and options do not require delivery of anything. You can sell wherever you like. Here's an article to explain things. http://agecon.uwyo.edu/RiskMgt/marketrisk/Hedgingusinglivestockfuture.pdf
I'm no expert, but have used these tools to manage risk.
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What does have to happen to be able to hedge this way is that the geographical margins must remain intact. If you are in a part of the country where geographical margins do remain intact and the margin is huge, you are pretty much screwed by the margin but you can hedge market risk (risk that market moves up or down) with futures.

There must be enough competition in the market place for the margins to remain with very narrow ranges.

A perfect example of this was the difference in cattle prices in Canada during the bse scare and prices in the U.S. They were very different because there wasn't much competition between this geographical difference.

Big companies can set different geographical differences but increasing or decreasing those differences to cheat meat producers in that area are specifically outlawed under the Packers and Stockyards Act. It was outlawed because it was a common economic fraud of the day before the passage of the Packers and Stockyards Act.

Federal judges are doing an end run on these protections of the market with their rulings that the new proposed GIPSA rules are meant to change.

Federal judges know about as much about economics as the politicians who threw out the Glass Steagall Act at the request of Clinton and Phil Gramm. If they really do know economics, they are corrupt. If they don't know, they are incompetent.

Tex
 
Tex - by margin, I assume you are referring to basis?

"A perfect example of this was the difference in cattle prices in Canada during the bse scare and prices in the U.S. They were very different because there wasn't much competition between this geographical difference. '"

Can you explain this a little further, not quite understanding what you're getting at.
 

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