What is the reason for low cattle prices this year

[rain]

I am out of the loop. What is the reason for low cattle prices this year other than high feed prices. Was the US drought worse then i heard?

[grassfarmer]

High grain prices are the simplistic answer. World wheat stocks are at a 25 year low, Canadian barley stocks are possibly lower than in the 02-03 drought. In reality if you costed out fattening a steer on $2.25 barley versus $3.25 barley the difference wouldn't be huge - certainly not when compared to the retail price of that steer. We have got into such a bad state of vunerability due to consolidation within the industry.
The fact we only have three major packers, two that really fix the price is a very big problem. They can pass this control onto the feedlot sector where there are also fewer and bigger players many of whom are custom or contract feeding for the two US packers. Being margin players the feedlots have no way to survive other than pay less for calves although I think some of them are starting to flex their muscles and drive the calf market to even lower values.
One thing that isn't wrong with cattle prices is the consumer end - how often we hear it said that the consumer won't pay enough to cover our costs or they only want cheap food. I would totally disagree with that. Retail beef prices are high enough in the stores, high enough for consumers to keep eating plenty and high enough to afford producers a sustainable incomes if they were fairly rewarded for their production. I know this because we personally sell customers premium beef in bulk at a price lower than the store, per cut beef. We can still net $350-$400 more per animal doing this even after paying custom processing charges of over $400 per animal.

Why are cattle prices low this year? - partly because grain prices have risen and mainly because we have a beef production chain that is rotten to the core and putting primary producers in a hopeless position.

[rain]

what about actual prices in the US and US cattle numbers? Did last years drought actually put more cows into the lots waiting to turn them loose on winter wheat? And were the states that do this flip flop unable to do it because the winter whaet crop burned off to. The packers are as well loved on this portion of agriville as the CWB is in the grain marketing side.

[Cattleman]

The meat complex is struggling a bit fight now, chicken is very cheap in the US and is pressuring beef prices. Today's CME daily livestock report was showing the dropping ground beef and chuck prices, and this is partly due to the drought in the US and the large number of cows going for slaughter. Lots of beef and chicken in the system is making the wholesale beef trade tought. Of course the high grain prices is a huge part of it. If things continue the way they are there will be lots of beef to trudge through, but lower beef numbers will eventually be the result, to help turn this around if feed grains prices stay higher.

[grassfarmer]

USDA October 1st report showed on feed numbers 9% up on the year. The US certainly seems to have had a severe drought but I understand that they also had the most significant fall rains in many affected states for several years. They are in the expansion stage of the cattle cycle triggered by the high prices of recent years so supply is still increasing.
I would think Canada is going against this cycle at the moment as the backlog of culls built up through BSE is being slaughtered faster this year. Bottom line though - has the cost of beef significantly reduced in your local store due to this supposed surplus in beef supply?