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Beresford, SD | Doing a little thinking this pm while cleaning pens.....
Facts:
1) numbers are down...killing 115k now vs. 130k 3-5 years ago
2) cow numbers down
3) record ownership of cattle by the big 4 (packers) VIA cattle in feedlots and via Packer contracts.
4) cheap feed.....following record feed costs
5) VERY current for over 6 months due to this crazy basis.
MY OPINION:
The big 4 are driving the cash higher to snuff out any remaining regional packers. They are doing this because 60-80% of their supply is captive (PC or packer owned in the yard) Why not bid up the cash and "breakeven" on their open cattle and make a fortune on their "owned" cattle. From what I hear and see many of the regionals are going dark and cutting kills. How else are the big boys going to be profitable with this much kill floor and a tight supply. After all the meat price somewhat resembles the current cash prices paid....?
Feeder cattle: Most dangerous time ever...IMO. I have been watching sales online for a couple weeks now. Seems to me everyone has lost reality......Bidding on feeders based on todays cash and not the respective contract month as to when the cattle will be ready. With todays numbers it is over $250/hd of fluff. CRAZY. I'm gonna go out on a limb and guess that around Nov.-Jan. we will invert the cash and board to a more normal basis. What is everyone else's opinion....am I off base.
Cheap feed in the long run produces cheap beef, pork and poultry.....that should be a fact not opinion!
Well I'm done for the day and going to watch my son ride his calf into the ring for his 4-H premium!
Edited by carlsoncl 7/31/2014 16:40
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Cattle fututres.
