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Napanee, Ontario | When it does turn, i'm sure there will be a cpl dimes' drop in fairly short order.... but from what price? And how much can it really drop until/if/when we get demand curtailment? My butcher friend at the grocery said they put a roast through the grinder last week cause they ran out of ground beef. This is the real deal... full blow supply crunch. Try to enjoy the fireworks - you earned it. I think i'll have a side of steak with my steak tonight ;)
In the meantime, here's a great post from Cornstalk1 over in market talk:
"This is not the normal cattle cycle, This is more a perfect storm attacking the cattle industry. In my opinion cattle numbers will stay down sized for a very long period of time. The prolonged draught in the West. Federal Crop Insurance, and improved demand for corn have all taken their toll.
(1) The prolonged draught long term forced kill capacity to go down, creating lower supplies, increased costs, ultimately ending up with a shrinking demand.
(2) Federal crop insurance is forcing marginal lands into crop production and less grasslands. That has increased grazing fees dramatically. In short, Federal crop is driving the land boom and putting pressure on the cattle industry to keep shrinking.
(3) When the ethanol industry moved processing closer to the source of their raw material, a competitive demand caused much angst among cattle producers, livestock actually had to compete for corn. Cattle did not have to compete with corn when it was subsidized by direct payments. The subsidy's shifted from corn to ethanol which was in direct competition with cattle for corn.
This was a rambling statement but points out that this not the old cycle but a paradigm market shift. If you are thinking the correct reaction is to wait for the old cycle come back, you might be thinking wrong." | |
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Oct feeder futures...... up the limit
