Can These Prices Hold??

[Tim/South]

it will take ten years to get the herd fully built back , as he said , there was sell offs in CA now because of drought there , there was massive losses in the Dakotas with the Blizzard this fall , we had a severe winter and a lot of cattle were hauled to town , so it will be a slow recovery , and take years,

Not sure if we can or if we should. Why would the herd ever "fully build back" ?

I agree with your thinking. I doubt the national herd will ever be what it once was. The age of those still willing to do what members of this board do is getting older one year older every year.
There is going to have to be good money in cattle for anyone to enter the business. Momma cow prices are too high to risk calf prices going back to where they were.
The American consumer will have to adjust, just like we did with fuel prices.

 

[Aaron]

If the herd does not rebuild (which I do not want it too - over supply), I can see North American governments eliminating the majority of subsidies/programs/grants for beef producers in the next 10 years.

 

[Nesikep]

I'd be quite OK with them eliminating the subsidies... seems like only the big guys get them anyhow.. There will be some 'adjustments' along the way, the feeders and packers (who get the money) will pay a little less and charge a little more for a while until things balance out. I'm with Bez on this.. It certainly isn't the time to borrow money to buy cows, and you may get better cows for your buck if you wait until summer... Right now everyone is looking at the prospect of green grass around the corner and that is driving the price.. If that grass doesn't stay green (and you haven't grazed yours to the height of astroturf) you'll be in a better position.
I don't think the herd will rebuild either, I'm sure the US is no different than Canada in the sense that there's lots and lots of 65+ ranchers out there, and since many had their places paid off, were able to make it through BSE without much more than skipping buying new equipment. What happened around here is when calves started to be 150cwt, they cashed out, sold their run down place to a yuppy who has a couple horses and needs writeoffs bringing it back up to snuff. Since the beef prices were high, ranch values were high, and that makes it darned near impossible for anyone who is young enough to start ranching to be able to afford the yuppy's price for the ranch. Around here, you don't get a 80 head capable ranch for under a $1million (and that's usually with no equipment or cows), and that's about as small as you can be and have a chance at staying alive, but 80 head of cattle will not service a debt of $800,000 no matter how low the interest rates are.

Just a sneaking suspicion, but I think at some point interest rates are going to have to rise... Interest is what takes money OUT of the economy, and seeing how much cash all the gov'ts have printed in the last 6 years, a time of reconning will have to come. Don't worry about the big guys though, they've bought up all the valuable assets with monoploy money, but will keep the assets when everyone goes broke, and they'll buy that up too.

 

[Aaron]

I'd be quite OK with them eliminating the subsidies... seems like only the big guys get them anyhow.. There will be some 'adjustments' along the way, the feeders and packers (who get the money) will pay a little less and charge a little more for a while until things balance out. I'm with Bez on this.. It certainly isn't the time to borrow money to buy cows, and you may get better cows for your buck if you wait until summer... Right now everyone is looking at the prospect of green grass around the corner and that is driving the price.. If that grass doesn't stay green (and you haven't grazed yours to the height of astroturf) you'll be in a better position.
I don't think the herd will rebuild either, I'm sure the US is no different than Canada in the sense that there's lots and lots of 65+ ranchers out there, and since many had their places paid off, were able to make it through BSE without much more than skipping buying new equipment. What happened around here is when calves started to be 150cwt, they cashed out, sold their run down place to a yuppy who has a couple horses and needs writeoffs bringing it back up to snuff. Since the beef prices were high, ranch values were high, and that makes it darned near impossible for anyone who is young enough to start ranching to be able to afford the yuppy's price for the ranch. Around here, you don't get a 80 head capable ranch for under a $1million (and that's usually with no equipment or cows), and that's about as small as you can be and have a chance at staying alive, but 80 head of cattle will not service a debt of $800,000 no matter how low the interest rates are.

Just a sneaking suspicion, but I think at some point interest rates are going to have to rise... Interest is what takes money OUT of the economy, and seeing how much cash all the gov'ts have printed in the last 6 years, a time of reconning will have to come. Don't worry about the big guys though, they've bought up all the valuable assets with monoploy money, but will keep the assets when everyone goes broke, and they'll buy that up too.

We are teetering on the edge of deflation, so it's going to be a long time before rates rise.

 

[Nesikep]

Rising interest rates can cause deflation.. Printing money ultimately leads to inflation (devaluation of money), and rising interest rates ultimately lead to deflation (increased money value).
If the money is worth more, that means that 1 dollar will buy more cow, which means we get less for our beef... screwed either way