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Why the downward slide?

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Grandad

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If the recent spike in cattle prices was a direct result of the law of supply and demand, why then are we seeing the current slide in prices? Have we found another five hundred million cattle in North America we were unaware of? Has demand dropped off because of high prices? Have those purchasing live cattle simply decided that they are going to pay the producer less? Just curious.
 

DejaVu

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Some are saying the guys who bought high-priced feeders found they weren't going to make $$$ when the cattle were ready early summer so they kept 'em in the feed yard-cheap corn-and added pounds. Lots of steers going to slaughter at 2,000 lbs. Radio today said carcass weights in October averaged 1,345 lbs. Dollar is high which is hurting exports. The big cattle have caused a tremendous glut in the supply chain. If you want, you can say greed caused the mess. :wink: From what I've read, it's going to be a long, long time before we ever-maybe never again see last years prices. I also think computer generated cattle futures trading isn't so great. Quite a few market analysts are unhappy with it.
 

4Diamond

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This paper trade on the board makes no sense, limit up limit down limit all the way around. Hard to establish a cash market.
 

Grandad

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We are on the side of the line with the low dollar. We are down around .75/US dollar. I guess that we would be that much worse off were we at par.
 

Denny

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Big Muddy rancher said:
Yep, I saw cows at Williams lake still selling for $3,000 yesterday. Top cows but still

So basically $2300 per head US dollars sounds about right. I think we'll be able to buy some good cows here for $1500 once the cow sales get rolling. 1st one is tomorrow.
 

Faster horses

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Grandad said:
If the recent spike in cattle prices was a direct result of the law of supply and demand, why then are we seeing the current slide in prices? Have we found another five hundred million cattle in North America we were unaware of? Has demand dropped off because of high prices? Have those purchasing live cattle simply decided that they are going to pay the producer less? Just curious.

I was happy to see this topic started, because we were wondering the same thing. The board was down the limit yesterday.
 

PPRM

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It likely isn't any one thing. Strong Dollar certainly affects Export and also Imports.

"Cheap feed leads to Cheap Cattle" is a very old saying that has stuck with me. If you look at inventory in only terms of "Number of Cattle", you only get part of the story. Tonnage is the other part. High Carcass weights include excess fat. Excess fat stimulates import of lean and blended together results in more ground.

Remember back a few years when $1.80 calves sounded like a great dream? I guess a lot of it is what has happened to your cost structure? The guys most hurt will be those who put their cows together the last two years in my opinion.
 

Brad S

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Feeders have blood all over them, $400/hd losses are common. Packers were all red until 6 months ago but not nearly like feeders. Up until 6 or 8 years ago, a carcass bigger than 950# was heavily discounted - I wondered when they changed the rule what would happen in a period of cheap corn. Btw, the only reason feeders can feed to current weights is the Cowman thinks he is maximizing profit by raising high frame score cattle. Frame 5 or 5.5 cattle just can't be fed so big. Some feeders have lost so much money their lender shut them off, some feeders got smart before they got broke. I haven't seen profitable feeder cattle in years; some made money on a bad gamble. The thing about these losses in the feeding sector is cattlemen were betting on the come when they placed them. Usually winter cleans up heavy cattle, but it's been pretty mild so far.

Tx,Ok,&Ks are all short of cattle wanting to expand. Think about the cattle saved for expansion taken out of the supply chain (until sold as culls). Drought took the south out of the cow business, but that's over. Get ready for the market skirmish because the south can raise calves for $1.25 and damn near like it. Expansion is a delayed effect, thus if you're looking at empty pastures at medicine lodge today, you're thinking about feeder losses (so you don't want to buy feeders), but $1000 steers are making money. The heifer you buy today, breed in May-16, calve in feb - 17 isn't going to exert supply pressure until sometime in 18.

The good news is there's plenty supply to be reduced in the feedlot with lighter weights. But part of the high calf prices comes from cheap corn. Higher corn will reduce carcass weights, but high corn comes off the price of calves.

Right now oct 16 feeders are just south of $1.60 (that's for 850# steers) so figure whatever premium for 600# bawlies.

Fats are taking a hit, but April 17 at $1.25 probably should have been shorted.
 

Big Muddy rancher

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gcreekrch said:
Big Muddy rancher said:
Yep, I saw cows at Williams lake still selling for $3,000 yesterday. Top cows but still

Did you see any that I managed to steal?


No I just watched the high priced ones then switched over to Gemstone bull sale. The bull I was bidding on went to your country along with 6 others. Guess there is to much money up in that country. :wink: :D :lol:
 

gcreekrch

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Big Muddy rancher said:
gcreekrch said:
Big Muddy rancher said:
Yep, I saw cows at Williams lake still selling for $3,000 yesterday. Top cows but still

Did you see any that I managed to steal?


No I just watched the high priced ones then switched over to Gemstone bull sale. The bull I was bidding on went to your country along with 6 others. Guess there is to much money up in that country. :wink: :D :lol:

Somewhere.........

It was a tough sale to buy reasonably priced heifers at. I did end up with 18 @ $2400. 3 weeks previous I got 37 for the same money, The first ones are mostly better cattle.
 

mrj

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Interesting comments, some probably sizing things up quite well. But, what has the effect been of that ill advised COOL law debacle? It surely hasn't helped because there have been only costs to implement it, with no compensating gain in prices. Redundant would be one of the more favorable terms for it, since there are literally dozens, probably hundreds, of private enterprise labels which were in place years before COOL was forced upon the markets. Problems usually result when government programs compete with private enterprise, and we all pay the price.

mrj
 

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