Tex: "Yes, I believe that packers are competing for the same cattle but I also believe that that it is mutually beneficial for them to not compete for those same cattle so they can push prices lower which is why the Packers and Stockyards Act was initiated."
Doesn't matter whether they would benefit from not competing for the same cattle, EITHER THEY ARE IN COMPETITION FOR THE SAME CATTLE OR THEY ARE NOT IN COMPETITION FOR THE SAME CATTLE. If they are in competition for the same cattle, WHICH WE KNOW THEY ARE, they have to price accordingly or their competition buys the cattle. It's that simple. It doesn't matter whether they'd like to pay the same price or not, what matters is whether they are paying the same price or not. If they were all paying the same price THE MARKET WOULD NEVER MOVE.
Sometimes the obvious is just too obvious for a packer blamer.
Tex: "It happens many times markets are concentrated that is why the PSA does not allow a discrimination in prices paid for the same quality and type of cattle. There was a showing that cattle prices outside of the grid pricing were discriminated against compared to the grid pricing. The judgment did not dispute that finding at all but trumped it with the London case decision which basically said that if your competitors are doing it, you can do it. It left the producer surplus out as a factor and so allowed the packers to gain the competitive advantage that market power gives to them via discrimination of prices to producers. They stole the barrier of entry that producers own by price discrimination."
If this bogus argument would have stood, it would have applied equally to the feeders as well. Meaning that if a particular feeder needed 10,000 head and he paid more than he wanted for 6000 head, he could not drop his price for the remaining 4000 head OF ASSUMED EQUAL QUALITY feeder cattle to average closer to what he was originally wanted to pay.
When cattle producers buy bulls, if they pay more for the first bulls they purchase than they wanted and drop their price for the remaining bulls they need, this would be unfair pricing using this same ridiculous logic.
When packers procure cattle via formula arrangements or forward contracts, WHICH IS MUTUALLY AGREED UPON BY BOTH BUYER AND SELLER, why should packers have to pay the same price for the balance of their needs in the cash market??? The feeder doesn't! The producer doesn't! Why should a seperate set of standards apply to packers?? The logic is absolutely ridiculous and goes against the very heart of the barter system. Anyone who purchases anything in volume will drop their prices as they fill their needs. Why would you expect packers to be any different?
More importantly, with 5 major packers all buying cattle, what's the chances that they have all filled their needs with formula and contract cattle at the same time reducing the need to purchase live cattle in the cash market??? The thought of market manipulation within the scope of understanding of the current fat cattle purchasing system is ridiculous.
You have 5 major packers with numerous marketing alternatives within each packer consisting of formula/grid pricing, forward contract pricing, and cash markets. How can anyone say with a straight face that feeders are forced to sell for less than their cattle are worth with so many marketing alternatives???
So what's the alternative Tex?? A socialized marketing system where all cattle purchased receive the same price regardless of quality since quality cannot be fully determined until the hide comes off?
What determines the TRUE VALUE of a fat cattle animal Tex??? Hmmmm???
I'll save you the time. It's carcass yield, carcass weight, quality grade, and yield grade. Now you tell me how you can judge that on the hoof without expensive scanning equipment and the stress related to obtaining the information by running them down the chute again??? If you are a packer that is paid on the value of beef, aren't you going to pay more on the grid, where you don't risk the value of the carcass, than you would on the hoof where you risk the value of the carcass???
USE SOME LOGIC HERE TEX!!!!
I've seen the live cattle judging contests where producers guess the value of the carcass before slaughter and none of them can get it 100% accurate so why wouldn't packers pay more on grid pricing where they know the value of the carcass as opposed to on the hoof where they are guessing the value??? Explain that Tex! You won't cause you can't.
The other thing that comes into play is that "VALUE" is not a constant target. If "VALUE" was a constant target, the choice select spread would never change. If packers have their needs for choice cattle filled with the grid, they are naturally going to change the price they pay for WHAT THEY ASSUME WILL BE choice cattle on the hoof because of a now narrower choice select spread.
Here's another hole in this ridiculous market manipulation conspiracy theory. If grid pricing cattle received a higher price, as the plaintiff's alleged, SHOULD THOSE FEEDERS BE DISCRIMINATED AGAINST AND RECEIEVE A LOWER PRICE CLOSER TO THE PRICE YET TO BE PAID FOR CASH CATTLE???
Here's another hole in this ridiculous market manipulation conspiracy theory. In order to prove discrimination between the time the grid cattle were priced and the time the cash cattle were priced, you'd have to prove that cattle supplies, and beef demand remained constant. How is that possible???
The whole problem with this entire conspiracy theory is that you have a handful of feeders and sale barn managers telling the rest of the cattle feeding industry how they should market fat cattle. The epitomy of arrogance.
There is nothing these LMA conspiracy theorists would like more than to route fat cattle through sale barns and carve more profit out of the picture while they create reduced value dark cutter carcasses from stressed fat cattle which are run up and down the alleys by the "whipping boys".
Darn I'm glad that common sense still prevails in this industry.
~SH~