Explosive Cattle Board! . . . .

[Cattleman]

I agree Errol, but not sure you want me agreeing with you! haha

As one producer posted on twitter, these basis levels have been a hedgers dream. That said now the pain of margin calls has been tough. I did take a small short position on some August fats just last week. Great profits in the cattle...now getting ready to buckle down for a wild ride!

[grassfarmer]

Grassfarmer I don't have the data. I am not the one making definitive statements as if I did...

Well you sure framed it like you knew asking if I understood the fixed costs of the retailers and food service industry before going on to outline how their operating costs, labor and keeping the lights on were increasing quicker than their cattle buying price.

What I have never claimed to know is the split up of the profit margins beyond the farm gate through the commodity system ie the packer versus the retailer. That is an awfully well guarded secret that I would like to get to the bottom of.

I do know the spread between live cattle price on farm and retail as I've been doing that. That spread leaves a huge level of profitability even with my amateur efforts at retailing and paying through the nose for processing. When I say paying through the nose, I'm not getting at these small custom plant owners as they have an incredibly tough row to hoe, but paying through the nose relative to the deal the large packers get. First they get paid to move here (in the case of Cargill in AB) then getting ongoing subsidies to modernize their processing facility, taxpayer funds to "increase their efficiency" plus this sector gets a hand in designing the provincial regulations dealing with small and custom plants so they in effect also get to handicap their competitors. A long, long way from the "free enterprise" that western cattlemen generally believe in yet they largely allow it to go on without question.

It's a disgrace that successive Governments in this country have failed at the barest minimum to enforce the Competition laws at their disposal and in the process picked the winners and losers. Unfortunately the winners they picked are JBS and Cargill a Brazilian and US owned transnational corporations and the losers are all Canadian cattle producers.

[Cattleman]

In terms of my question regarding knowing the cost, it was simply that we don't have the data, so how can we make any specific conclusions? In some things I had read about in the food service sector, there were other challenges in terms of overall costs, and it went way beyond the price of beef. Therefore, we are quick to judge or draw conclusions without really knowing the whole story. Everyone just jumps to blaming.

The big problem with the supply chain that I see is that it is all segregated and everyone is only concerned about their margins. They get their competitive advantage by doing things cheaper than the next guy and delivering beef, pork poultry, or whatever as cheap as they can, and this does not bode well for the primary producer. There are more of these other niche or attribute marketing chains, but after guys invest a pile of time into these supply chains, at the end of the day, it doesn't sound like their margins are all that lucrative anyway?

You have a bunch of other cans of worms there and I don't disagree with some of those. I was very surprised to hear last year when the Cargill Guelph plant got government funding for an expansion (i think it was for rendering or something??) yet Ontario prices were severely depressed and that plant was probably making very good margins.

[errolanderson]

Did we just witness the highs of the North American cattle market for 2017?

Cattle board has been in a steady selloff of-late . . . .

[Cattleman]

My guess the highs are in. But I might be a bit biased because I am short! Futures already have plenty of downside priced in. If August futures do get back to the 110 area, I will be buying back my positions.

Making margin calls would be a good scenario too though.

[errolanderson]

From an explosive fat cattle market to 'how low can it go?' over the course of one (1) month.

Alberta fat bids appear in process of tumbling 25 to 30 cents/lb from early May.

Hogs prices and pork are the beneficiary as consumers now buck at the beef counter.

[Cattleman]

Has been pretty resilient. Lots of spunk today. I thought over 140 fats was certainly bonus territory, and not too far from that today! Summer market still to come, but heading into it in pretty good shape I think.

[errolanderson]

Volatility is the name-of-the-game. Texas and Kansas cash cattle bids rose $3 to $4/cwt this week, now heard around $136/cwt. Packers again near-term shortbought. Shortcovering also contributing to sharp weekly gains to the cattle board.

Alberta fats appeared heading below $1.70/lb early week, but that may have changed . . . .

[malleefarmer]

Does anyone understand the indian ban on cattle for slaughter am I right in suggesting 15 to 20% of the worlds exportable cattle will be removed from the market?

It was to appease the hindu section of indian parliament and there are actually bans in many states in india already?

Shouldn't prices head further north? The void has to be filled or supplies will be short.

[WiltonRanch]

Does anyone understand the indian ban on cattle for slaughter am I right in suggesting 15 to 20% of the worlds exportable cattle will be removed from the market?

It was to appease the hindu section of indian parliament and there are actually bans in many states in india already?

Shouldn't prices head further north? The void has to be filled or supplies will be short.

Interesting. Heard they were a big exporter but banning it is quite something.