Get READY for a "BIG TRAIN WRECK"??

[TexasShooter]

People
Get READY for a "BIG TRAIN WRECK" and don't say U weren't 'WARNED'

I have read a few posts about this and would like to get more opinions...Where do you think it's headed and Why?

How far will the market go down? Even if it went back to prices a year ago - they're still high! I just don't see a train wreck anytime in the near future. If there was one event that would have affected the market it would have been the scare of the mad cow disease…and it didn't even affect the market! It just kept going up, up, up. Now, I am not saying the market will maintain this level forever, but look at the market tends of our economy and where they're headed - The Adkins diet (and many more similar diets), every company under the sun developing low carb foods/snacks, and not to mention - the overall growing demand for beef. I believe the market if anything will go higher, not lower.

Simple Law of Supply and Demand.

 

[Frankie]

I read recently that the packers have not been able to increase prices to wholesalers and retailers; that they are losing about $30 a head at current prices. If that's true, we can expect to see some lowering of what they're willing to pay for fats. There's a price where consumers will turn from beef to cheaper pork and chicken. I don't know if beef has reached that price yet, though. I saw some Brahman-influenced (heavily influenced) calves sell on TV yesterday for $115. It's amazing to me that someone can buy ANY calves at that price and make money. But they must be doing it because it's been going on for a while. I don't think we'll have a real train wreck, just a slowing down of prices and demand. But what do I know??

 

[dcara]

Was there any justification for losing the $30/hd or just a unsupported statement. Do you remember where you read it? All the cattle market reports I've been reading still forecast strong demand for beef and good price support through this year. Though I would think that the jump in energy costs have to be putting the squeeze on everything from feed to packing. But then increased energy cost will affect pork and chicken also which should keep the relative status quo. My feed costs have increased 10% in the past 3 months.

 

[TheBullLady]

I just can't foresee the prices being able to stay at the level they are... if nothing else, think about the cattle cycle. Supply and demand will impact the market obviously, but what tends to happen is that people start retaining heifers in an "up" market, which means fewer heifers go to feed, which means steer calves bring more $$$, etc. But eventually that will catch up with the market.. ie: the heifers will start calving, there will be a drought somewhere and producers will be forced to sell off their cow herds, corn or fuel or fertilizer will go through the roof in pricing.. you get my drift.

What does everyone thing about the Canadian border opening? Don't you think that will impact our market substantially?

 

[C & C Land & Catt]

Yes TBL I think it will. I know that we are 30 yrs down the road but in 73 there were alot of guys with ideas like this. They went bankrupt. I am sure CRR's dad did not think the Canadian market would crash when he sold his worked dirt and bought cows, but hindsight is 20-20. What I think will happen is for some reason the goverment will say beef is bad for us and we will have a few mad cow cases confirmed in the midwest, and then the northern border will open up. While this might only drop the market 30 cents I think the market will be more like 30 cents for fats. The futures markets for next year have dropped substantialy but the price has gone up. If you do not think it will drop substantialy go mortage a few acres and buy some futures. A lot of people who are new to the cattle business ie. 99 or later, have not seen a remotely bad market or drought. Just two cents from somebody who has seen it happen a couple of times.

 

[Campground Cattle]

Yes TBL I think it will. I know that we are 30 yrs down the road but in 73 there were alot of guys with ideas like this. They went bankrupt. I am sure CRR's dad did not think the Canadian market would crash when he sold his worked dirt and bought cows, but hindsight is 20-20. What I think will happen is for some reason the goverment will say beef is bad for us and we will have a few mad cow cases confirmed in the midwest, and then the northern border will open up. While this might only drop the market 30 cents I think the market will be more like 30 cents for fats. The futures markets for next year have dropped substantialy but the price has gone up. If you do not think it will drop substantialy go mortage a few acres and buy some futures. A lot of people who are new to the cattle business ie. 99 or later, have not seen a remotely bad market or drought. Just two cents from somebody who has seen it happen a couple of times.

Was bad in 73/74 and its going to fall hard again.When the Northern border opens those boys are going to sell anything that can moo. You can't blaim them for that. My 2 cents. Talk about drought I was almost givivg cows away in the 99/00 drought.

 

[Texan]

Anytime you've got people putting cattle on feed that cost $900 going in, you better start preparing for a day of reckoning. When those cattle lose $200-$300 a head, what do you think those guys will want to bid for your feeders?

Some of these cattle are going in so high, the only way they can possibly work is to put an awful lot of weight on them. The beef supply will go up mighty fast like that. Supplies are always what hurts us. Low head counts don't necessarily equal low supplies if our fed cattle get too big.

Methinks it best to prepare for the worst. The only question is how much time do we have?

 

[C & C Land & Catt]

You guys aren't having a drought down in east Texas now are you? Friend of mine at A&M said they got 17 1/4 inches in 24 hours.

 

[Texan]

You guys aren't having a drought down in east Texas now are you? Friend of mine at A&M said they got 17 1/4 inches in 24 hours.

Well, we got less rain than anybody around in June. Just over 8 inches. Not complaining, though. I'll take 8 inches every June from now on if I can just get it contracted.

 

[dcara]

No doubt that cycles are guaranteed in any commodities market. So if you think a train wreck is eminent then why not take a hedged position?

 

[Texan]

No doubt that cycles are guaranteed in any commodities market. So if you think a train wreck is eminent then why not take a hedged position?

That's a good theory, Doug. Too bad our natural greedy streaks make us want to ride it up as far as we can. Like I asked above, "How much time do we have?" If we knew when it was going to happen, I'm sure everybody would jump at those hedges. But we might have a good market for a while. And if we got some good news, such as the opening up of Japan, daily margin calls on those short positions would sure take all of the fun out of the ride up, wouldn't it?

 

[dun]

This entire "cyc;e" has lasted far longer then anyone could expect. Drought in the west and natural greed is helping it along. High milk prices have also had a profound affect. Common wisdom is to sell heifers when the market is high because by the time they reach their productive prime the market will have swung low again. Keep heifers when the market is low and by the time they reach their productive prime the market will be up again. It hasn't made the swing so there are a few people starting to retain heifers and rebuild herds.
We're retaining heifers again this year but I have no firm opinion on when/if the wreck is coming. I just really like this years crop of heifers.

dun

 

[Campground Cattle]

You guys aren't having a drought down in east Texas now are you? Friend of mine at A&M said they got 17 1/4 inches in 24 hours.

No this year my pastures look like C##p lots of bottom land and it rained here 56 days out of May and June. Tuesday was the first day I was able to fertilize. Hay field is still to wet to get into. It has been a very wet year were up 20 inches already and they are predicting rain tomorrow.

 

[Craig-TX]

If you look back at classic historic commodity bubbles, one of the main indicators that a market was reaching a top was leveraged buy-in by neophyte speculators. When it becomes common for people with no background in a given commodity to start borrowing money to get in on the ride, look out. No offense intended to anybody and I'm not saying that we're seeing that on a wholesale level yet. It's just an observation.

Craig-TX

 

[MULDOON]

Kind of like Emu's & Ostrich??? :lol:

 

[Anonymous]

Kind of like Emu's & Ostrich??? :lol:

And Llamas

And goats. 25 years ago I easily got $1.25 -1.50/lb for my kids. now that everybody and his brother has goats the market has dropped to around a $1.

 

[C & C Land & Catt]

Kind of like Emu's & Ostrich??? :lol:

Now that was a train wreck!!!!!!!!

 

[CattleAnnie]

Welcome to Hell.
We're living through a train wreck up here right now. Today at the local sale barn saw 1100 -1150 lb thin middle aged cows sell for three cents a pound ($3.00cwt). Who could have forseen what one animal testing positive for BSE a year ago in May could do to our market? And here we thought we already were bottomed out.

Very good quality yearlings that sold today:
19 tan steers
908lbs $78.75cwt
8 tan steers
754lbs $86.00cwt
2 tan steers
1015lbs $69.75cwt
2 tan steers
863lbs $78.00cwt
2 tan steers
855lbs $77.00cwt
2 tan steers
838lbs $79.75cwt
1 tan steers
639lbs $95.25cwt
3 tan heifers
888lbs $71.00cwt
2 red sim heifers
825lbs $72.00cwt
4 tan heifers
811lbs $72.00cwt
10 tan heifers
807lbs $71.75cwt
2 tan heifers
733lbs $75.25cwt
1 tan heifer
785lbs $73.25cwt
2 white heifers
770lbs $73.00cwt
2 tan heifers
493lbs $80.00cwt
( The above listed were sold by a rancher who just suffered his second heart attack and was released by the hospital last week. These were beautiful calves that he raised and overwintered hoping for better prices, but would have done better to sell as fall calves, as he simply lost money on them, especially given the feed put into them to get them this far. Who could have foreseen this market last fall?)

Pairs from $410.00 to $610.00 each.
Fat cows and bulls at $15.00cwt. As I previously mentioned, 3 thin cows that weighed 1100lbs sold for $3.00cwt.
(Keep in mind that these prices are in Canadian dollars.)

When you subtract all the commision, shipping, taxes, etc from the bills of sale, the picture becomes even bleaker. Many people have received nothing for selling their animals except a shipping bill. This is the reality of ranching up here since May 19, 2003.


Take care.

 

[la4angus]

Nothing says that it can't happen on this side of the border.
Thanks Cattle Annie. If and when it does it will be a very sad day

 

[Tman]

I was at the sale barn on Wednesday. 200-400lb steers going 1.45 Cwt., uncut same weight 1.30 cwt. Heifers , I think there were only a dozen of them we just as high as the steers. 730 pund heifer for 110 CWT. They were even paying high for the horns !