Cattle bubble like housing bubble?

[uscangus]

Do i sense there might be a cattle bubble like housing bubble? I recall that we had a shortage of houses and recall people would say that it would be vital to invest. hence, the supply and demand kicked in, and everyone joined the band wagon to invest in housing. in return, drove the price higher and kept the supply very low.

Oh men, i feel like everyone in my area is joining the band wagon from hobby farmers, part-time farmers, small farmers and so on). hence, the prices of cattle has escalating and supply is very limited. there is a lot of calf/cow producer in my area that are new buyers. heck, a price of calf/cow pairs are around $1200. i purchased my mine around $650-700 with great BCS and younger cows(black angus) and that was only several month ago(around dec or jan).

I understand that the feed is low but heck you still have to make hay with expensive diesel or petro. also, it costs time and money if you have make hay. the cost of using the machineries is still expensive. in addition, to hire someone, it costs money. in my area(northwest), purchasing a bale of hay of two strings, it is about $3. it is still expensive.

according to cattle economists or advisors, they are shortage of cattles compare to last year. they say that the world economy will expand. heck, the only country that i know is heating up is China with cheap labor and dumping their cheap goods in the global countries and destroying our manufacture jobs or jobs. with PIIGS(portugal, ireland, italy, greece, and spain), and western european countries, they have the same problem that we have. compared to last year, we were not aware of some western countries that have severe problems. this year, i feel the whole global economies is stuck in a rat hole. i don't see our country improving the second half of the year to stimulate the consumer in expanding their purchasing power.

with no stimulus to creat jobs and no jobs growth in the second half, where is the demand of beef for consumer demands in the future?

 

[Angus Cowman]

it is the Ebb and flow of the cattle business
when prices get high everyone and their brother wants to buy cows cause all of us cattle producers are getting rich and then in a yr or so the prices level and oh bubba that has some cows ain't making as much money as he thought and his wifey needs to keep getting her nails done and the rugrats need new video games and
wifey says sell them dang cows they are taking away from our family money and we are suffering and being neglected and having to do with out all the needed things( $300 purses, the newest clothes, and a all the materialistic things they need to keep up with the Jones)

so take advantage of it while we can and don't get over zealous with the money you are making and just remember prices will come down

Just my 2cents

 

[TexasBred]

Fortunately folks have to pay for cattle...The so called "housing bubble" was nothing more than a bunch of people getting approved for loans that they knew they could never afford and sellers inflating prices knowing the loans would be approved regardless. The folks that use to rent for 6 months, get behind on the rent and disappear into the night could not BUY, live in the house indefinitely because basically noone knew what to do with a loan that was only 35% secured and many are still living in those houses.

 

[SRBeef]

Fortunately folks have to pay for cattle...The so called "housing bubble" was nothing more than a bunch of people getting approved for loans that they knew they could never afford and sellers inflating prices knowing the loans would be approved regardless. The folks that use to rent for 6 months, get behind on the rent and disappear into the night could not BUY, live in the house indefinitely because basically noone knew what to do with a loan that was only 35% secured and many are still living in those houses.

TB makes good points above. The basics of the cash cattle business in the US are very sound, regardless of what happens in Europe (USC I think you worry too much!). There are and will always be ups and downs on all agricultural markets. Just part of the natural cycles of agriculture, weather, etc.

However, we do need to be very aware of what can and may happen due to speculative money entering (and sometimes quickly leaving) the cattle markets futures, options, etc. These folks are in cattle to make a quick buck - and often do - regardless of fundamentals and realities. They have no interest in production or end uses nor who or how they take money from. They look for ways to make the market move and to profit from the movement.

The recent "Flash Crash" in the stock markets in May could happen in the cattle futures and options markets. Here is a link to a Reuters article that describes what happened in the stock market and how it is moving to other markets and other locations around the world. People moving their computers next to exchange computers so their trade gets handled first.... Personally I would suggest we individuals limit our exposure to this type of market manipulation.

http://www.reuters.com/article/idUSTRE6595GO20100610

People tell me this won't happen in ag commodities because of daily trading limits. However those trading limits are wide enough for folks to make a lot of money riding them up and down. And that money comes from someone/somewhere.

I feel the cash cattle markets are basically very sound. One of the characteristics of the live cattle business is that thiings take a long time to really change much. Regadless of how computers work in nanoseconds, calves still take 9 months to be born and 15 months or so to reach market size after that. 2 years. That ime introduces a dampening on cycles which is a nuisance when you are trying to increase a herd but in the end also stabilizes the market to some extent.

We need to be aware of changes going on in all of the non-cash markets however. jmho.

Good topic.

Jim

 

[Angus Cowman]

[ (USC I think you worry too much!).

Jim

Kinda reminds you of someone who bought a fat hfr and was worried about her not gaining weight

 

[SRBeef]

[ (USC I think you worry too much!).

Jim

Kinda reminds you of someone who bought a fat hfr and was worried about her not gaining weight

If I knew how to use the smilies on the right I would probably blush.... You are right. but that is one of the benefits to discussing things here and elsewhere. I learned something though that process from you and others and from the heifer. Jim

 

[1982vett]

Cattle bubble my butt!

 

[uscangus]

Fortunately folks have to pay for cattle...The so called "housing bubble" was nothing more than a bunch of people getting approved for loans that they knew they could never afford and sellers inflating prices knowing the loans would be approved regardless. The folks that use to rent for 6 months, get behind on the rent and disappear into the night could not BUY, live in the house indefinitely because basically noone knew what to do with a loan that was only 35% secured and many are still living in those houses.

texasbred, angus cowman, and to all advisors- i brought this topic just to stir a conversation in regard to high prices and people pumping cattle shortages. i used the analogy of housing market of supply/demand because the sell by pundits of "shortage of cattles" compared to last year, escalating prices, and the feed is low compared to last year. i did not intended to compare the credit crunch, unqualified buyer who wanted to flip, and pervasive and predatory mortgages or lenders.

my question to the boards was supposed to be that the price dictate the demand of beef. i understand the time frame of crop feed production and the time production of yearling. i was just amazed how the prices have escalated without any merits or the demand.

SRBeef-i think you judge to prematurely but was not offended. my sunken cost or initial cost is very low. i understand the price cycles of cattle prices, feed prices, and seasonal changes. my question to the boards was that i was taken back by sell or buy pundits who is pumping the price of cattle in future market(who is probably being paid by some hedge fund futures to push-buy). in return, you get casualties from this pundits.

this cow/calf is like any business like my dental offices. you never want to enter when it is high when everyone is selling. there is alway a buyer and seller. there is alway profits and lost.

 

[Angus Cowman]

If I knew how to use the smilies on the right I would probably blush.... You are right. but that is one of the benefits to discussing things here and elsewhere. I learned something though that process from you and others and from the heifer. Jim

just a little good-natured ribbing Jim

for the smilies just click on the one you want when ya want to use it

 

[kenny thomas]

Who sold calves last December knowing they would be as high as they were in April? No reason for them to change that much in price if all the info we were getting from the reports were correct. I am not sure anyone really knows the numbers of cows in the US.
I just ride the wave but I sell quite a few cows and it is much easier to make a trade when the cows are high. When they are high I never have enough and when they are cheap it is hard to get anyone to buy.

 

[SRBeef]

USC quote: "...i was just amazed how the prices have escalated without any merits or the demand."

I think you will see there is fairly good demand for beef - at least some cuts and grades. Both domestic and export markets. As discussed below, demand did slow down after Memorial day but I feel there is a good basic underlying demand for beef in various forms and markets.

I feel we need to be careful on the futures however.

Here is a good link to an ag market program I follow every week. Part of the discussion is always about cattle:

http://feedproxy.google.com/~r/MarketToMarket-MarketAnalysis/~5/aE0ociKaf8E/3541disc.mp3

and their extended discussion here:

http://feedproxy.google.com/~r/MarketToMarket-MarketPlus/~5/HaVw3T-VFKw/3541plus.mp3

Jim

 

[novatech]

Do i sense there might be a cattle bubble like housing bubble? I recall that we had a shortage of houses and recall people would say that it would be vital to invest. hence, the supply and demand kicked in, and everyone joined the band wagon to invest in housing. in return, drove the price higher and kept the supply very low.

Oh men, i feel like everyone in my area is joining the band wagon from hobby farmers, part-time farmers, small farmers and so on). hence, the prices of cattle has escalating and supply is very limited. there is a lot of calf/cow producer in my area that are new buyers. heck, a price of calf/cow pairs are around $1200. i purchased my mine around $650-700 with great BCS and younger cows(black angus) and that was only several month ago(around dec or jan).
You think this may explain part of the reason?

I understand that the feed is low but heck you still have to make hay with expensive diesel or petro. also, it costs time and money if you have make hay. the cost of using the machineries is still expensive. in addition, to hire someone, it costs money. in my area(northwest), purchasing a bale of hay of two strings, it is about $3. it is still expensive.
Around here small squares are going for $6.00.

according to cattle economists or advisors, they are shortage of cattles compare to last year. they say that the world economy will expand. heck, the only country that i know is heating up is China with cheap labor and dumping their cheap goods in the global countries and destroying our manufacture jobs or jobs. with PIIGS(portugal, ireland, italy, greece, and spain), and western european countries, they have the same problem that we have. compared to last year, we were not aware of some western countries that have severe problems. this year, i feel the whole global economies is stuck in a rat hole. i don't see our country improving the second half of the year to stimulate the consumer in expanding their purchasing power.

with no stimulus to creat jobs and no jobs growth in the second half, where is the demand of beef for consumer demands in the future?

 

[TexasBred]

Another dairy buyout program just around the corner. Should pump some additonal cattle into the packer market. Wonder what that will do to that market?

 

[SRBeef]

Every wet year (like this one in many areas) folks are looking for cattle to keep the grass down. Especially with hearing prices are up a bit for selling them in the fall. In a dry year the opposite - folks selling cattle because of no grass. Part of the natural cycles. jmho. Jim

 

[RICHARDL]

I bought cattle 3 years ago mainly to give me fresh meat, and to keep my grass down. doesn't cost me a whole lot to keep them. I started with 6 heifers & 1 year old bull. now i have 4 calfs. and one around the corner. also bought 1/2 dozen chickens. If things get bad i can eat my cattle & chickens or eggs. With the price of seafood already going up. people will be eating beef. prices might go up. Its BP's fault ha ha. blame them everyone else is :cowboy:

 

[uscangus]

Every wet year (like this one in many areas) folks are looking for cattle to keep the grass down. Especially with hearing prices are up a bit for selling them in the fall. In a dry year the opposite - folks selling cattle because of no grass. Part of the natural cycles. jmho. Jim

in my area, i drove into my pasture grass and it was as high a door frame on a regular forerunner. it was probably as four feet high or higher. we had a lot rain this winter and spring. last month, it almost drizzled rain throught the whole month. once sun and heat that pasture, it grows like wild fire. i have to cut hay by beginning of july or the first week of july.

here, we have shortage of cattles and have a lot hays and pastures. new buyers are buying cattle for feed and to sell. good bcs cattles or skinny cattles are being purchased knowing with plenty of feeds and hays that skinny cattles will be one day good cattles.

eventually, when they all sell by fall, there would be plenty of cattles in the market from dairies and new or existing buyers that will suppress the price.

 

[backhoeboogie]

in my area, i drove into my pasture grass and it was as high a door frame on a regular forerunner.

Uh Oh. You drive one of those huh?

 

[Herefords.US]

in my area, i drove into my pasture grass and it was as high a door frame on a regular forerunner.

Uh Oh. You drive one of those huh?

backhoeboogie, i worked cattle Friday morning, loaded up 3 bull calves and took them to the Dublin Sale Barn. I got there about 10:30 AM and was floored at the lack of activity. There was only a half dozen pickups in front and absolutely no one was in line to unload. I've never seen it like that there on sale day before!

I asked the folks unloading if I had been the only one who didn't get a memo or something. They jokingly replied that it was still a little early. Could it be that most all the cattle that needed to be sold have been sold and inventories are truly that low?

Any ideas?

George

 

[WichitaLineMan]

what'd ya get for 'em?

 

[backhoeboogie]

in my area, i drove into my pasture grass and it was as high a door frame on a regular forerunner.

Uh Oh. You drive one of those huh?

backhoeboogie, i worked cattle Friday morning, loaded up 3 bull calves and took them to the Dublin Sale Barn. I got there about 10:30 AM and was floored at the lack of activity. There was only a half dozen pickups in front and absolutely no one was in line to unload. I've never seen it like that there on sale day before!

I asked the folks unloading if I had been the only one who didn't get a memo or something. They jokingly replied that it was still a little early. Could it be that most all the cattle that needed to be sold have been sold and inventories are truly that low?

Any ideas?

George

That's amazing. I have not been in nearly a year. There's usually truck and trailers backed up a half mile or so.

I've got 4 to cull. Maybe now is a good time.