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Lets talk cattle.
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Q500
Posted 4/20/2021 13:55 (#8963114 - in reply to #8962089)
Subject: RE: Lets talk cattle.


western colorado

Simocattle - 4/20/2021 06:29
Q500 - 4/19/2021 18:00

When feed gets out of control high the packers loose their grip.  Look back at the big uptick in cattle prices in the past and its always preceded by huge feed prices.  Remember 2014 the packers where bidding what boxed beef was "trading" for as hanging price.  Also keep in mind their break even is making $150/hd on by products.  As far as I can tell the row crop guys are going to make out like bandits for the foreseeable future.  Cattle will follow.  Hell all food and AG in general looks promising at this point.  

What you say is all old school thinking. Yes the packers used to live primarily live off the by product values. I had some hope six months ago that we would see a very profitable year for cattle feeders and cow calf operators but I have turned very bearish with the way live cattle prices are being manipulated. Every time we get a CFAP payment we see a strong downturn. The only way feeders get out of this mess is to drop slaughter weights about 100 lbs. but I don’t think packers will speed kills up enough to allow that to happen.


Thats the "It's different this time." mentality that so many mistakes are made from.  Although its never identical there are always lessons to take from the past.  All the free money is affecting markets big time.  How ever that lesson is in the past in the form of inflation.  Two outcomes that I can see are rapid inflation and the tearing down of the Dollar, or high interest rates to try and control inflation.  Everyone should think about both of those outcomes.

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