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Those were the good old days!

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Mike

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Summary

The packer’s and retailer's share of beef’s retail value increased above 50 percent as boxed beef prices increased faster than fed cattle prices after the weather influenced first quarter. The retailer's share was near-record 44.8 percent during August 2001 after setting a new record 46.1 percent in July. During August 2001 the packer’s share of beef’s retail value remained slightly above the trend line at 9.23 percent. The record high packer share was in August 1998 at 12.4 percent. The total marketing share during August 2001 was 54.7 percent. Producers received 45.3 percent of beef’s retail value during August as fed cattle prices declined seasonally with increasing supplies of market-ready cattle.
Background

USDA data show that the retailer's share of beef’s retail value has generally increased from the 35 to 38 percent range common during the first half of 1993. Retail margins declined to those levels during December 2000 and January 2001 in spite of continued modest inflation in costs for labor, utilities and other variable and fixed costs. The retail spread was a record 46.1 percent during December 1998 and was reported at 41 percent during May 2001. During 1997 the packer spread averaged 7.3 percent -- compared to 7.9 percent during 1995 and 1996. An increased packer's share of beef’s retail value to the 8 to 10 percent range is consistent with the trend to further fabrication, case-ready pre-packaged beef and increased value-added close-trimmed boxed beef.

USDA includes by-product values in packer spreads and in the total “retail” value of products. The packer spread is calculated as the sum of by-product values plus the value of boxed beef minus the cost of fed cattle. Part of the increase in packers’ share of retail value prior to 1997 was due to an increase in by-product values to more than $100/ head during most of 1996 and 1997. The financial crisis in Asia reduced export demand for variety meats and lowered hide values. May 1999 by-product values declined to a new five-year low price level of $7.68/cwt. and have continued recovery to near record levels. By-product values were $10.68/cwt. during May 2001 -- the twelfth consecutive month they have been above $9.00 since December 1997.

Total packer gross margins (combination of boxed beef and by-products) during April 1998 at $65.85/head were the lowest since February 1995, but rebounded to a new record $175.39/head during May 2001. The spread between boxed beef prices and fed cattle prices was distorted during late April and May 2001 due to USDA errors in calculating boxed beef cutout values. Independent analyses commissioned by NCBA estimated that errors in calculating cutout values cost producers approximately $42 million. These losses along with increased by-product values are reflected in the record-wide packer gross margin reported during May.
 

HAY MAKER

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DON'T START BOY,got some errands to run :wink: be back this evening........good luck
 

packerland

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Welcome to negative margins and red ink. You'd think we'd find a happy medium where we can ALL eat at the table... never quite seems to work out that way does it.
 

Beefman

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Mike.....the report you posted has nearly four years of age on it. This was written by Chuck Lambert in Sept '01. Perhaps your next post will show how ugly the numbers have been since.

Beefman
 

Mike

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Beefman said:
Mike.....the report you posted has nearly four years of age on it. This was written by Chuck Lambert in Sept '01. Perhaps your next post will show how ugly the numbers have been since.

Beefman

I know how old it was. Was it not the good old days?
 

Beefman

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Mike....."I know how old it was. Was it not the good old days?"


I have to doubt you really meant to refer to Sept '01 as the good old days. You must have an opinion or reason for posting the data.

Beefman
 

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