this from Troy Marshall:

[Faster horses]

Packer Margins Continue To Be Tight
This week, big packers announced cutbacks in their hours to deal with the
shortage in numbers and the negative margins they've experienced. This year
will undoubtedly go down as one of the most brutal for the packing
industry.

These packer announcements really don't mean much at all, except supplies
are tight and they're trying to raise wholesale prices to minimize losses.
But they do provide some reminders worthy of reflection.

First of all, the "stick" of leverage in the marketplace has been firmly on
the side of the cow-calf producer. Numbers surely will increase, and the
increased numbers will change possession of the stick. When this happens,
expect discounts to grow, whether it be for unconditioned calves or Yield
Grade 4s.

Secondly, our success from an industry perspective is reliant on building
beef demand. Certainly exports and global competitiveness is a big part of
this, but domestic demand is crucial. In recent months, poultry and pork
have continued to exploit their price advantage relative to beef. If we're
to move beef demand ahead, we must improve our value proposition relative
to chicken and pork.

In the short term, the market responds by cutting back hours, or by cutting
prices, etc. In the long term, we have to build demand.

Businessman and entrepreneur Harvey MacKay wrote a book entitled "Dig Your
Well Before You're Thirsty." It's a suitable analogy for a beef industry
that's just experienced a period of rapid demand growth and record prices,
and has begun to see those trends soften.
-- Troy Marshall

 

[Big Muddy rancher]

This should probably over on bull session cause it will probably spark some debate.
I was reading an article about Consolidated beef producers, a group of feedlots in the states that have banned together to market larger volumes of fat cattle. A Canadian group has pattered themselves after this idea in a attemp to get more cattle sold on the cash market therefore better establishing the cash market and since there is fewer packers bidding they want to eliminate underselling among themselves.
I applaud this effort of feeders working together but on the other hand whats stopping them from all using the same order buyer to eliminate the competion between themselves for the cow/ calf producers calves?

 

[seth]

That's a very good point BMR and one that I don't hear very often. Ever notice how many cards are held by certain order buyers at our presort sales? If every card represents an order then there is effectively NO competition between any of those orders for calves. The buyer will buy the calves as cheaply as he can and then decide to which card he will assign the purchase.

 

[Jason]

I'm not sure order buyers really lower the market.

I used one this spring to buy cows. He had other cow orders, at least 1 in the category I requested. His other orders were for more money, so he used them on the fancier type cows. His cards all served to compete for cows available, the sheer number of trader cows coming to town this spring was what hurt prices more than the same buyer buying them for different orders.

What did happen, he talked me into buying 30 more cows than I ordered. I'm glad he did, they aren't great cows, but I will turn a buck. The cull prices have risen and the price was based on a lower cull price so that aspect worked as well.

 

[Anonymous]

Drought hitting livestock prices


LIVESTOCK prices across NSW are in freefall, with farmers selling off record numbers of sheep and cattle as the drought worsens.

Meat processors say they cannot take any more livestock, and producers say they are concerned about how low prices could go.

I think in the short run, the Australian drought and their weak dollar (about $.74 US) will be one of the biggest impactors on our cull prices.......If the multinationals can ship it in cheap- why pay for it here...

 

[don]

ot: I think in the short run, the Australian drought and their weak dollar (about $.74 US) will be one of the biggest impactors on our cull prices.......If the multinationals can ship it in cheap- why pay for it here...

how many cattle does australia have? what could be the longterm impact here? this kind of ties in to the article i posted about herd expansion in the usa. are american cattlemen culling harder and keeping more replacements in the face of the drought? they would be positioning themselves for taking advantage of better moisture conditions. it also relates to the cattle cycle. i think commodity cycles have lengthened and flattened as the scale of individual operators has increased. the increased fund activity in the markets may make for shortterm volatility but overall there are some aspects that are more stable.