Cattle Market Epic Collapse

[errolanderson]

youtube.com/watch?v=UgxbOAdYvZk

Contract lows again today. Impacting all facets of the industry from light calves to yearlings to cows to the fat market to wholesale beef prices. Record weights have to be cleared stateside, but it will take time.

Much quicker and sharper decline than most expected.

Don't shoot the messenger . . . .

[riders2010]

Any cheap cattle expected from
The new trade deal?

[grassfarmer]

Not a collapse of the 2003 variety though. 5-weight steer calves bringing $14-1500 are still epic prices!

[Happytrails]

ol' Corb must have lost some hide lately. I liked him when he did the USDA reports. He seemed overly negative this time. Of course I'm not thinking about how the backgrounders and feeders are doing. They are in a margin business. They control their own cost of production when they buy replacements.

The important thing is that the calf producers have been making a lot of money and are probably still are making some. The supply of calves will increase until many calf producers are NOT making money. At this point the supply of calves will begin to decline and eventually the price of calves will rebound.

It is called the cattle cycle. You've got to love it. It takes acres, a rancher and a mothers love to raise a calf. Luckily we are a part of that equation. If the packers and feedlots could raise their own calves and replace us they would. So far they can't. Enjoy the ride.

[errolanderson]

Happytrails . . . well said. The cow / calf producer is the heart and soul of this industry.

[perfecho]

"The cow /calf have been making a lot of money...not necessarily.
Depending when you sell your calves, you really only have one shot at it in a year, so you may have had only one good year of prices. Even though the prices were generally high, you may not be able to take advantage, unless you get into preselling etc.
The prices are certainly much better than they were, and that is a relief. Think if there is too much of a dip, some producers are going to say to heck with it, especially at high hay costs and uncertainty of the market.
Not sure where prices would be if Canadian dollar was higher...prices would certainly be lower yet

[Braveheart]

Pressure on futures driven by concerns over slowing demand and heavier weights. Institutional bears taking a bite. They might choke on their bite. The numbers aren't really there.

[newguy]

Cattle numbers in Canada still low.Good demand for beef and feed grains not real expensive.Prices are down to last year's prices.Last year was like selling 1 calf crop and getting paid for 2.Anyone that made it through the BSE will still be very happy with the next couple years of cattle prices.

[bucket]

Expansion in cattle numbers don't come with high cattle prices.

Real cow guys sell down in these times. Keep their core cows. Put some cash in the bank (some have gold bars at the ranch) to weather thru the down cycle that inevitably comes when they or the next generation start the rebuild.

[cottonpicken]

Just got a chance to look at the charts. Pretty interesting. Unaware it was happening. Using eyeballed tech we got a hundred percent rise from from the 120 level to the two forty,now maybe a 50%fib retraceish with long bottom trend line one seventy ?wave pattern doesn't quite fit but with the rest of the commodity space falling apart hard to be bullish. Hard to do this stuff on a phone

[errolanderson]

Cotton, what's interesting in the price discovery of cattle is; the cash leads the futures. Whereas, in the grains; the futures lead the cash.

The North American cattle market is now in a fundamental shift and the cattle board is following this direction.

[westernvicki]

2http://beef2live.com/story-world-cattle-inventory-1960-2014-130-111523014-130-111

World cattle inventory is still historically low.

[errolanderson]

Interesting comments from Glynn Tonsor
Kansas State Univiersity

http://beefmagazine.com/blog/wonderments-about-expansion-current-market

[errolanderson]

westernvicki . . . You are right, cattle supplies remain quite low from a historical viewpoint. But the current problem with the cash cattle market is demand.

Beef cutouts are dropping and slaughter is well down from three years ago. These issues have been triggered by flagging beef demand at the consumer level.

The good news is the cattle board rebounded on Friday, but the bad news may be why? There remains a steady supply of overweight cattle heading to market in the near-term.

But the decline in prices may start to heal the decline in demand at the consumer demand level, but it will take time. Overall, the cash cattle market has now moved into a new, lower trading range.