The beef packer profit margin was a positive $32.20 per head

[rancher]

CHICAGO (Dow Jones)--Wholesale beef and cash live cattle prices are firm, but

Chicago Mercantile Exchange live and feeder cattle futures are predicted to

open mixed Tuesday morning as traders concentrate on rolling June longs and

seasonal summer supply projections.



Floor traders say a record roll of long June positions into August, scheduled

to begin with Friday's closing range, has for all intents and purposes already

started.



As a result, spreading has been the major feature thus far this week, and

that activity is expected to continue Tuesday.



June has bore the brunt of sales as accounts associated with the Goldman

Sachs Commodity Index roll sell June and buy August. Other large accounts are

taking advantage of the opportunity presented by the August purchases to sell

August and buy December.



Cash cattle sources say they are looking to the futures market for assistance

in pricing this week's cash live cattle, but futures are focused on June

values, at the earliest.





Live Cattle Fundamentals





The choice/select spread for Monday was $16.30. The U.S. Department of

Agriculture reported the choice/select spread Friday at $16.30. Boxed-beef

prices were higher, with the composite value for choice beef up $0.45 at

$163.89. Select beef prices were up $0.15 at $147.59. The volume of sales for

fabricated loads was 160, while the load count for trimmings and coarse grinds

was 78.



The USDA estimated cattle slaughter Monday at 114,000 head, compared with

107,000 a week earlier and 124,000 a year earlier.



The beef packer profit margin was a positive $32.20 per head.



The CME feeder index was 6 points lower at 111.64.

 

[agman]

CHICAGO (Dow Jones)--

The beef packer profit margin was a positive $32.20 per head.

Rancher, the margin you quoted is computed by my research firm-it is not a conspiracy. May is typically the best margin month of the year as seasonally strong beef demand occurs while fed cattle supplies are increasing. This is the best margin in many months, mostly every week has been a loss for several months. It is their turn in the barrel. The beef cutout has topped and will trend lower. If fed cattle are not purchased lower the positive margin will disappear by this time next week.

You might also do a search on Dr Grimes and Dr Plain, University of Missouri, who are now stating beef demand declined during the first quarter. It is better late than never but our research has been showing that pattern beginning in the second quarter of 2004. I fully expected it would take the rest of the world 2-3 quarters to get the analysis correct.

What are you doing to protect the value of your production out-front? Have a great day.

 

[rancher]

Agman-it is not a conspiracy

:roll: :roll: :roll: :roll: :roll: :roll:

 

[Brad S]

Agman, I'm sure you know National has had some hard times. I haven't heard the numbers on Japan, but USPB was moving alot that way back iin the good old days.

 

[agman]

Agman, I'm sure you know National has had some hard times. I haven't heard the numbers on Japan, but USPB was moving alot that way back iin the good old days.

National is a good company and very good for the beef industry. I was involved in a joint meeting with Steve Hunt last fall and they still did not understand that the squeeze on margins was the result of a weakening in domestic beef demand. That position was not popular and it never will be. I am anxious to see how the industry reacts now that the academia has also concluded determined that domestic beef demad is not what it uesed to be.

All the packers have had a difficult time; one should not feel sorry for them. It was the packers time in the barrel. Those that survive will be better for the experience. Profits are cyclical for every segment of our industry as you know. I hope the producer segment does not overlook the opportunity created by the improvement in demand from 1999-early 2004. Reduced beef production and reduced net beef supplies have supported prices during the bulk of 2004 and 2005 YTD.

The problem of not focusing on the real factor driving prices will inevitably have many producers looking in the wrong direction. Then, when the market changes and they are in the barrel they will find someone to blame for their misfortune. They always have found someone new to blame. In the 70's it was the government, in the 80's it was the futures markets, and in the 90's as today captive supply is the demon. The only constant during all those periods was that prices moved inverse to supply just has it has for centuries. The only exceptions were the limited periods of time when beef demand improved. Stay focused, supply and demand do work to determine price-always have and always will. Have a great day and give the kids an extra hug.

?Did you ever get your e:mail fixed?

 

[Brad S]

Agman, I asked My brother to fix my email and he said it wasn't broken. I said it was, so he spammed me with all sorts of crap like viagra. It seems to be working ok. Try [email protected] - remember no c in shultz or its sombody else.


So if we have a downward shift in demand, why? And how far?

I have mucho respect for Hunt, but am troubled by combination of A) current losses and B) Hunt dismissed forewarning. Would you say Hunt is up to speed now or still in denial? I'm not inclined toi throw the pitcher under the bus for a couple bad pitches, but at the level Hunt plays the game there is little room for error.

Thanks for mentioning my kids - they're all healthy and happy. They go from little kids one minute to young adults the next.

 

[mrj]

I saw a headline to the effect that a union is trying to get into the National pack, on unfriendly terms, of course. If the company is struggling, that could severely impact them, couldn't it?

I don't believe people have given enough consideration to the unions' demands and resultant high costs of production as one big reason for the outsourcing of jobs from this country. I'm sure the meat packing/processing industries are not immune, and wonder how much that will come to harm the producer.

MRJ