East Central South Dakota | I really don't have a horse in the race (neither feed or have cows anymore), but I love beef and agriculture and the Cattle industry is very important component of Agriculture.
1. I love beef, but will eat chicken or pork. I would love to drive a Mercedes, but drive a Ford. People will do what they can afford. Like it or not Beef will have to compete with the other complex of animal proteins.
2. Former school mate is a VP for Cargill meats. Exports of beef are crazy good and show no signs of retreat. (Haven't talked to him since the dollar has risen). American consumer will have to compete for available supplies of beef with the rest of world.
3. South America is eyeing this world beef market, just like they did with corn and beans. The three big packers are down there as I type helping build an animal protein industry in South America.
4. When compared to world price of beef and alternative use for land---- beef is not to high of price here.
5. Speaking of land-----it is always about the LAND. Cow calf guy has $800 bucks into a calf at weaning including land costs, machinery, and Ect. (I know it varies, but work with me here). Cow guy has $800 bucks in calf and is getting/selling for $1600--------$800 profit. When we got out of cows we had 9 acres tied up to a pair (grass, hay and pasture lots). Lots of farm averages in Soybeans up here this year in the mid to lower 50's. $350 dollars into beans, 50 bushel yield at 10 bucks if you forward sold some is $500 bucks/acre. $500 bucks an acre minus $350 costs = $150 DOLLARS OF PROFIT/ACRE. $800 DOLLARS OF PROFIT FOR THE COW GUY DIVIDED BY THE 9 ACRES OF LAND USE FOR A PAIR IS $89/ACRE. It is always about the competing uses for the land. Hard to argue cattle are high enough to steal land back into grass. $150/acre profit soybeans-------$90/acre calf.
6. Speaking of land-------who has a lot of it cheap or cheaper than us----South America. Above bullet point 5. is what is going to push the cattle expansion to South America. Didn't even talk about crop insurance and now a new farm bill on the crop side. What the cow guy getting in the farm bill ? Not much as usual and most cowboys would keep it that way.
7. Hard to argue calves are too high and hard to not see that the farmer feeders are being forced into some high risk for low margins. "Catch 22"
8. Markets correct and push to the cost of production----simple rule for commodities. All about the LAND and that will push cattle expansion to where the cost of production is the cheapest.
9. Perfect world we keep a bunch of farmer cattle feeders and maintain a healthy sized North American cow herd.........................but........
10. BUT, I fear I am thinking like an Agriculturalist who wants to protect my industry. I am afraid the consumer neither cares where the cattle are fed or by whom and could care less where the cows are----their only concern is CHEAP BIG MACS OR WHOPPERS. We all have front row seats on how this historic event will eventually shake out.
Edited by white shadow 10/10/2014 09:47
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Cattle making history and is in "Catch 22"......................
