Get READY for a "BIG TRAIN WRECK"??

[Texan]

Give me a prediction Texan, I say it's good for another year anyway, maybe two. It could get cheaper but I don't see a bottoming out till 2010. What say you?

I think 2010 is as good a guess as any. If anything, I think it might be longer than that before it actually bottoms out. The only problem is that a lot of these cow-calf optimists will be buried way before it bottoms out. I really don't see how some of these guys can service debt with $1.00 calves. Much less with the 80 cent calves that might be coming.

The Fall delivery calves that I have seen already look a good bit cheaper to me. If they're $5 or $10 dollars cheaper every year for several years, it will be a long slow death for some people. I just figure that it doesn't really matter to me when it bottoms out. If I make every decision like my current calf crop will bring 80 cents for the steers and 60 cents for the heifers, I'll be in good shape if I'm right and even better shape if I'm wrong. I know some of these new guys will laugh at those numbers, but it hasn't been that long ago that those were relevant figures.....

 

[Caustic Burno]

Give me a prediction Texan, I say it's good for another year anyway, maybe two. It could get cheaper but I don't see a bottoming out till 2010. What say you?

I think 2010 is as good a guess as any. If anything, I think it might be longer than that before it actually bottoms out. The only problem is that a lot of these cow-calf optimists will be buried way before it bottoms out. I really don't see how some of these guys can service debt with $1.00 calves. Much less with the 80 cent calves that might be coming.

The Fall delivery calves that I have seen already look a good bit cheaper to me. If they're $5 or $10 dollars cheaper every year for several years, it will be a long slow death for some people. I just figure that it doesn't really matter to me when it bottoms out. If I make every decision like my current calf crop will bring 80 cents for the steers and 60 cents for the heifers, I'll be in good shape if I'm right and even better shape if I'm wrong. I know some of these new guys will laugh at those numbers, but it hasn't been that long ago that those were relevant figures.....

Good points I have culled already to half capacity. I hope we will get 80 cents. We ill find how sharp everybodies pencil is when it hits.

 

[Tod Dague]

I hope we will get 80 cents.

Are you hoping it will drop to 80 cents or are you hoping that we will get at least 80 cents when the market drops?

 

[Caustic Burno]

I hope we will get 80 cents.

Are you hoping it will drop to 80 cents or are you hoping that we will get at least 80 cents when the market drops?

I hope to get 80 cents have sold them a lot cheaper in the past.

 

[Beefy]

If I make every decision like my current calf crop will bring 80 cents for the steers and 60 cents for the heifers, I'll be in good shape if I'm right and even better shape if I'm wrong. I know some of these new guys will laugh at those numbers, but it hasn't been that long ago that those were relevant figures.....

thats the numbers i use too.

 

[Beefy]

it wouldnt surprise me a bit to see 80 cents two years from now. 2010 is probably a good guesstimate about bottoming out now that i think about it more. 80-85 is what i'm HOPING for too but when we talk about bottoming out i'm thinking in my head more like 60-75. i dont think it will be anything drastic like 25 cents as it has been in the past, though. i hope. 75-85 is what has been considered "normal" prices in my lifetime. so thats what i expect it to return to eventually.

 

[aplusmnt]

I have no past experiance in this area being I am new to all this. But I do wonder if the hitting bottom price is not as big of an issue in my planning to grow a profitable herd in the future. I see people quoting prices from past experiance but I wonder if the price will ever go that low again or if it really matters as much as to how low they will go versus the rising cost to raise them.

I am sure how low the price can go will hit hard, but maybe it does not have to go as low as some are planning before it gets unprofitable. I worry most about how expensive it will be to keep a cow in the future. Cost of everything is rising on a very fast pace. Might be rock bottom $100 in near future will be the $50 of the past.

Seems we can not do much about the price at the stock yards but we better be watching with a Sharp pencil (to quote Caustic and Bez) on the cost to maintain a cow.

 

[George]

I hope we will get 80 cents.

Are you hoping it will drop to 80 cents or are you hoping that we will get at least 80 cents when the market drops?

I hope to get 80 cents have sold them a lot cheaper in the past.

If they only go down to 80 cents,we will be laughing up here.After 3 years of serious drought,and having the border closed because of bse.I would have gladly taken 80 cents in the fall for my calves.I am predicting the cattle cycle to bottom in 2008.

 

[aplusmnt]

In the past when cattle prices have hit bottom, how long did they stay there? How many bad years based on previous cycles should a person prepare for?

 

[Beef11]

I think that there is a point at which MOST people say "alright I've lost enough money on these beasts" And yes when we reach that level of unprofitability people will sell their herds. It really comes down to supply and demand. If producers are losing money the national cowherd will shrink until supplies become tight, bolstering the price. Cattle are a longer price swing due to the time it takes to get a new animal into her productive life. The big question is how much producers can take before they start to get rid of cows. High energy costs will play a key role by adding stress to the producers budget and of course drought will be a geographic player as always. Watch for corn prices to feel the heat from high energy as well. If corn stays low it well help stop the bleeding when cattle prices are low. If corn is on the high end expect it to substantially lower calf prices. Economic health of the country will play a role on what americans eat. If everyone is prospering expect people to eat out and have barbeques if unemployment and recesssion abound people will not coin up for the better meat. Warm winters through the midwest will effect the rate of gain on cattle and how fast beef can be produced. The canadian border will have an effect as well. Don't expect it to stay closed for ever and its opening could swing the pendelum from under supply to oversupply, its only a couple of percentage points. Export markets, consumer confidence, cool, and mandatory ID will also play a role. As for indicators watch percentage of heifers in the feedlot, Corn Prices, Fuel, interest rates and canadian inventory. If the commodities market is bullish it can also drive up the price through artificial hype on the flipside watch for the bear the psychological devaluing of animals is typically the fastest way to decrease its value but thankfully it usually wrinkles out in a matter months there.

Pray
Play it smart
Work hard
Pray

 

[Brandonm2]

"I think that there is a point at which MOST people say "alright I've lost enough money on these beasts" And yes when we reach that level of unprofitability people will sell their herds.".

I am hoping it hits in fall 2008 or spring/summer 2009. I have got 175 acres under fence, a logging crew clear cutting about 90 acres of that and following a fire or two and a bunch of dozer work I hope to put 130 acres into grass next fall/next spring. I sold out in 2004 just before the peak really hit so hope this time to catch peak bottom.

 

[ollie']

With the outmonth contracts of fall feeders over $1.15 even I am amazed. Any new predictions? They can't hold that price level can they. I think the smart money (if I had any) would be a short contract or two.

 

[Workinonit Farm]

I think the smart money (if I had any) would be a short contract or two.

You may be right.

These prices have held longer than I would have expected.

Katherine

 

[Howdyjabo]

Sad thing is how long am I gonna wait for the train wreck that I know is coming. I've been seeing it come for two years now

 

[Workinonit Farm]

Sad thing is how long am I gonna wait for the train wreck that I know is coming.

I suppose as long as it takes unless you choose to bail out beforehand.

I for one will continue on, wreck or no no wreck, and ride it on through as best I can.

Katherine

 

[ollie?]

I like to revisit this post every year or two just to see how we're faring. The market is still holding but it seems that the poke in the eye is coming from the cost side of the equation. Anyone want to look into their crystal ball and make any predictions?

 

[Brandonm22]

I don't know. $5 diesal and $1000 a ton fertilizer means a lot of people who were profitable now are not. $6 corn cuts into the profitability of the feedlots limiting what they can afford to pay for calves and still be profitable on their end. On the consumer end, unemployment has climbed to 5.8%, energy costs are cutting into consumer's disposable income, home foreclosures are up 140% from last year, home prices (most people's biggest asset) are down in value 15% (if you can sell them at all), and all other foods are approaching all time highs due to high energy costs so it is inevitable that some consumers will have to cut back on their beef consumption.

On the bright side, population is still climbing due to the unenforced border laws so even if some consumers cut back their consumption the trend longterm is toward increased demand as the number of total consumers keep climbing. Chicken has had to substantially raise their prices due to the corn prices. Also despite the high prices for beef we never saw a cow herd increase because cattleland is going into development, into corn, and into recreation while high land and cow prices is an impediment to new people getting into the business, thus existing ranchers are increasingly old. A switch to smaller cows could (in the near term) lead to decreased production as 200 lb smaller brood cows also translates into 200 lb smaller market steers. The plummeting value of the dollar means that the costs of American beef to the international buyers has dropped helping the export market. A lot of people are predicting a commodity collapse starting with oil. IF oil and corn DROP six to twelve months from now that should translate into higher profitability for beef.

Longterm I am bullish. Short term there could be lower feeder calf prices.

 

[ollie?]

Credit where credit is due. There is twisted metal and smoke coming off the cattle market currently. Here's the wreck.

 

[CattleHand]

Corn and Soybean prices are dropping which means grain should drop also right? I was thinking if you can buy cattle now would be the time. When grain prices drop with the corn and soybean prices then cattle prices would go back up (except that we are coming into the winter). As someone else said in another board if you can buy now i think you should especially if you can feed them through the winter.

 

[somn]

Corn and Soybean prices are dropping which means grain should drop also right? I was thinking if you can buy cattle now would be the time. When grain prices drop with the corn and soybean prices then cattle prices would go back up

What part of the world are you from that you don't consider corn and soybeans to be grain?