cattleman, all of the variables that you mentioned along with others such as currency movements will affect the short-term cattle prices. But the cattle cycle being 10 to 12 years long can be used to help predict the longer term movement of prices.
Also, it does not matter what the Canadian cattle herd is doing, expanding, shrinking or staying the same. Prices for fats are set in the U.S.,like it or not and the size of our herd has no bearing on prices. It may be hard to swallow but our prices are established by the U.S. market--there really is no such thing as a North American price--there is a U.S. price that is reflected, with the basis, in Canada.
I am always amazed at people who think that all commodities, including cattle, are not cyclical. This is not really mysterious-when prices are high commodity producers (cow-calf guys) expand their production to take advantage of the high prices. This, in turn, leads to more product, more supply to meet a limited demand and, therefore, prices decline. This forces producers to cut back, hence less production to meet demand, therefore higher prices. Therefore a cycle.
At the moment U.S. cattle producers are expanding to realize higher prices. This will result in more calves coming to market, hence more product and lower prices in the future as I stated in my previous post. It matters not at all what Canadian producers are doing in terms of liquidating or expanding their herds. Except that if you expand when the U.S. guys are expanding, you are going to be stuck with more calves when the prices slide.
The old saying is that no heifer calf kept to be bred when prices are high has been a profitable cow. Mainly because that heifer's calves are hitting the down side of the market. The best time to buy or keep heifers for breeding is when they are selling for .70 a pound and nobody wants them. Then that heifer's calves will hit the rising market.
kpb
Also, it does not matter what the Canadian cattle herd is doing, expanding, shrinking or staying the same. Prices for fats are set in the U.S.,like it or not and the size of our herd has no bearing on prices. It may be hard to swallow but our prices are established by the U.S. market--there really is no such thing as a North American price--there is a U.S. price that is reflected, with the basis, in Canada.
I am always amazed at people who think that all commodities, including cattle, are not cyclical. This is not really mysterious-when prices are high commodity producers (cow-calf guys) expand their production to take advantage of the high prices. This, in turn, leads to more product, more supply to meet a limited demand and, therefore, prices decline. This forces producers to cut back, hence less production to meet demand, therefore higher prices. Therefore a cycle.
At the moment U.S. cattle producers are expanding to realize higher prices. This will result in more calves coming to market, hence more product and lower prices in the future as I stated in my previous post. It matters not at all what Canadian producers are doing in terms of liquidating or expanding their herds. Except that if you expand when the U.S. guys are expanding, you are going to be stuck with more calves when the prices slide.
The old saying is that no heifer calf kept to be bred when prices are high has been a profitable cow. Mainly because that heifer's calves are hitting the down side of the market. The best time to buy or keep heifers for breeding is when they are selling for .70 a pound and nobody wants them. Then that heifer's calves will hit the rising market.
kpb
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