Interesting article on the cattle price crash

[Kell-inKY]

......
It's paper being traded..........
...........
It's a joke

agreed with your entire post, I saw a chart on one of the financial sites I visit showing how supply and demand had nothing to do with the price of oil, it was dependent upon the futures market.

Anyway, I liked the rant at the bottom of the article by Ruthann about the COOL stuff also. It's a load of bull not being told where your food comes from.

 

[SJB]

Well, the futures market is certainly about supply and demand. It's just that it can and is manipulated up and down by traders outside of true supply and demand. It'll always correct, and that's where money is made and lost.

Unfortunately real producers get hurt when the price is manipulated down, just like they (hopefully) get helped when its manipulated up.

 

[Tim/South]

Oil is down because of increased production and availability. Corn is down because of over supply.
We do not have an over supply of cattle. Even with people jumping into the cattle business, it still takes heifers 3 years to cash a check.
I have said all along that the consumer determined the demand. Retail beef quit moving as well. Some say due to pricing, some believe collusion.

The USDA said the recovery was almost complete. After the price crash they said, "Maybe not".
Prices were going to fall. There is no reason for the crash. No Mad Cow, no Pink Slime, nothing major.
Australian imports were up 50% in 2015. 70% of that was ground beef. It took lawyers to force the USDA to honor American company contracts for ground beef.
Did packers adjust weekly slaughter numbers to keep from buying form feed lots while they slaughtered their own Fats?
Did packers trade with packers to keep from buying from feed lots?
Did retailers push chicken and pork so cattle numbers would back up?
Who knows? I am just glad people with some authority are asking.

 

[Stocker Steve]

Low interest rates and the endless pumping up of asset prices have resulted in a surplus of virtually every commodity. The only real way to keep the party going is a high rate of growth. Since that is not happening - - expect more government spending on roads and school loans and such, until... Meanwhile, the worriers are hoping that stock brokers and real estate agents will continue to make enough in fees to buy spendy steaks. Otherwise it will get really ugly sooner.

I saw some stats that claimed 90% of all futures volume are gone by computerized traders. All they need is a change in price. Price direction does not matter if you are not a producer.

I sold some $2 calves in early January. That may be the high for the next couple years. We need to ask ourselves what it will take to weather the down turn, and is there a way to actually profit from declining markets?

 

[greybeard]

Just one 2011 type drought away from another big selloff tho.

 

[hillbillyhammer]

Just one 2011 type drought away from another big selloff tho.

Exactly!