How come this market is so poor?

[cowman]

The slide in the feeder market is fairly ugly right now. And I guess it is even worse in the fat market. Yet when I trot into Safeway prices don't seem to be going down! There was actually a frozen steak in the "organic" section for $37.50/kg.!!!Looked like it might be fairly tough!
Now I do understand the feedlots have taken a bath this winter and can't afford to pay any more for feeders. A very large portion of the feeder cattle are heading south, which makes sense...why import corn to feed to our cattle when you can send the steers to the corn growing regions? How long until people like Cor van Ray head south to feed cattle?
There are a lot of cow/calf pairs showing up in the marts. Also a lot of good breeding type heifers are moving into the feedlots. I believe this is all drought related. I sometimes wonder if we'll have enough cattle to fill the demand if this drought doesn't break. I suspect opportunity could be knocking for some producers in the wet areas. I have never seen a spring quite like this one. The snow went straight in. Absolutely no run-off.
What would happen if we got an abundant rainfall year? We know there is going to be a lot of barley planted this year. If it came in a bumper crop what would barley be worth? If it was really cheap we could see some pretty high prices this fall for calves?

[jmillang]

There are alot of factors in the relationship from cow calf producer to the final consumer. You may think that every one is taking their peice of the pie and that is true, but remember that non of the food chain is price setters mererly exploring what the buyer is willing to pay vs was he could sell iot for.

I was reading in a marketing report that interviewed several major retailers both in Canada and the US. The retailers perceptions that beef had moved up the price ladder and wa now so expensive that it could not even be used as a lost leader (pricing scheme to get customers in the door. The meat counters were taking a bath on lost leades so reatilers will feature specific cuts (not slash prices) rather than use beef as that loss leader. They also suggested that they would use other meats as lost leaders (if they had to) but would rely on grocery and produce to create the customer traffic.

Over the last few years it has been interesting to see consumer prices move in response with commodity prices - beef is following the same way as the gas and crude oil whip lash.

This too shall pass - we are still above 5 year averages only lower than 2001 and 2002.