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Get READY for a "BIG TRAIN WRECK"??
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<blockquote data-quote="Brandonm22" data-source="post: 547152" data-attributes="member: 7645"><p>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. </p><p></p><p>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. </p><p></p><p>Longterm I am bullish. Short term there could be lower feeder calf prices.</p></blockquote><p></p>
[QUOTE="Brandonm22, post: 547152, member: 7645"] 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. [/QUOTE]
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