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| Begin with Meat.
Beef, USDA predicted tonnage..I calculate as a percent of previous year.
first quarter 99.6%
2nd quarter 99.4%
3rd quarter 100.5%
4th quarter 96%
Pork, USDA predicted tonnage,..again my calculations as compared to prev. year
1st quarter 102.1%
2nd quarter 104.5%
3rd quarter 103.4%
4th quarter 97.9%
Broilers, USDA ...etc etc
1st quarter 103.5%
2nd quarter 103.1%
3rd quarter 102.7%
4th quarter 102.2%
Questions to address in cattle....will we see the non-feds begin to come to town & the cows? Will it be a trickle, or large? Or at all?
If so, when? Which quarter will catch the increased tonnage?
Same basic questions in Pork.
Broiler intentions can change fast so while a big factor, one has to assume that production will begin to flatten.
Need to also consider, the consumer increasingly strapped for cash.
Assumptions:
Any liquidation will place excess tonnage in the affected time period and will influence prices of wholesale meat.
If cows and other non-feds come to town, it increases the availability of ground beef and will be of price influence.
If the liquidation is spread over a short period, the reduction in supply in the later quarters and a lowered breeding herd then builds for a major series of price increases down the road.
I am just now going through the CFTC report...includes options and futures.
Soybeans, the large traders reducing longs in old, increasing longs in new; small traders increasing new crop shorts.
Corn, a different situation. The market is clearly in the grip of the large traders with big increases in longs...small traders still short but for all practical purposes...flat for the past month.
Ending Corn stocks to Corn Supply ratios: (June,Aug,Sept Quarter only-not full year)
2002 -- 36.4%
2003 -- 32.2%
2004 -- 48.8%
2005- 45.1%
2006-- 36.9%
current crop --33.5%
Sometimes, in bull markets...livestock producers and other users sit on the fence worrying & consider their future actions..WAS THIS COMBINATION OF REPORTS THE CONVINCER???
Next, I am not predicting this, but in my long experience, there are most likely some users, usually large corporations, who are not protected on the long side....sort of knowing those types...I suspect these reports are the convincer for them and should see some new longs from those folks...when they can get in.
Next, this market may well ration through price BEFORE any statistics or data is available. That is, if everyone just bites the bullet at the same time.
THEREFORE...it is essential to have a game plan Monday ...If all these boys get run in en masse'..the rationing may be partly over...not predicting this...just my gut hunch.
I have bunches of more data to analyze before I get my own game plan in order. A retired Iowa producer called me from Arizona & wondered if he should pitch the rest of his corn...(I advised him to sell the first half when I cleared out of the market a few days ago, and feel a little red-faced about that) & told him to hold off until Monday...I should have a better feel. He's been around a long time & understands the game. At least he still talks to me. A good sign. Keep one friend.
One other thought rolling around in my head: if this grain situation, in other countries, and have not had the time to go through all of the data, is critical....it could (not predicting) translate to higher meat exports down the road...
The other thought, in the Fed minutes, they are clearly concerned about food inflation. This next advertised rate cut...could be the last & then just let the free markets sort it all out...a very big question as if we begin to lose jobs...it will effect demand.
I would appreciate any input from you folks in regard to the above questions I have asked.
Edited by SeniorCitizen 1/12/2008 14:59
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Some early numbers
