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Cattle Biz Headlines

31 Jan

It’s been what, six weeks since my last post?  A lot has happened in the world during that time.  I like to troll around on social media and see how people react to it.  I have come to think I must be kinda dyslexic,  because I see things differently.  Over the last few months I have got to meet a few readers of this blog.  The biggest compliment I get is “I don’t always agree with you, but damn, you sure made me think about it.”

Here very recently my Facebook and Twitter feeds have been full of the news of Japan taking beef up to 30 months of age. (If we have not met in real life do not friend request me on Facebook.  Follow me on Twitter @mrcattlemaster instead)  I saw very little about Cargill closing the Plainview plant.

One of these will affect the cattle biz in a big way.  The other not so much.  While everyone has their pompoms out for the Japan deal I am talking to guys who are facing reality.  Think for a moment.  Will Japan suddenly import more beef from us?  I doubt it.  They will probably just import cheaper beef.  See their economy is imploding in a huge way.  In case you didn’t know they are in way worse shape than the EU or the US.  We are printing $4 Billion a day to prop up the stock market, just to give you some perspective.   (Don’t think that funny money doesn’t spill over to commodities.  If you are in the market in any way get out!  I don’t care to hear your hedging BS.  You tell me that you obviously don’t know what hedging is).  So what will this do for the market?  I have seen very little affect so far, and I’ve been buying cattle just about every day since that announcement.  I think it will be difficult to gain much when we are in a currency war.

One thing that has had a profound affect is the closing of the Plainview plant in TX.  There are groups that think this will be a huge positive for our state.  Couple that with the Japan news and man they got their pompoms and megaphones out.  “NE is the beef epicenter of the world”.  Um ok.   I currently have the privilege of buying cattle for a big feed yard.  The owner tells me that the National buyer has not been there to bid cattle for a couple of weeks.  He called the guy up to find out why.  The buyer told him that he didn’t need to buy cattle in NE anymore.  They can get all the cattle they need in TX and KS.  Less competition down there now.  This leaves only a few major buyers in the yards here.  I spoke to the Cargill buyer in my area last week.  He told me that if I had some fats that I better get them on his list because they are filled for the next three weeks.  As show lists continue to grow I can only imagine the wait will get longer.

Learn a lesson from the sheep industry.  It is my understanding they had three for four packers.  Sheep producers were making money.  When I was in NCBA’s YCC group a few years back there was a buyer from Tyson in our group.  He told me that packers hate each other so bad they will buy cattle at a loss just so the other packer can’t own them.  That is what the sheep producers had going on.  One packer finally had enough of buying at a loss just to keep the doors open.  So they closed.  This left only two or three packers.  The reduced competition has allowed to the remaining packers to bid less for sheep, resulting in the packer making money and the sheep producer losing money.

I do  not understand the meat complex we have in the cattle biz.  Guys, unless you are a packer you sell CATTLE, not beef.  Japan in this case is not your customer.  The packer  or feedlot is your customer.  So do you need more end consumers or more customers?

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1 Comment

Posted by on January 31, 2013 in Uncategorized

 

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One response to “Cattle Biz Headlines

  1. Marcia Moreland

    February 1, 2013 at 9:11 am

    Just heard that Russia is halting all American beef exports to their country effective Feb 1. So Japan relaxing their imports from us it now becomes a draw. You are right on with the packer/feedlot/producer relationship. Most average farmers don’t understand the ‘food chain’ in the cattle industry. I was raised on a farm and now am a cow/calf operation. I wanted to understand who I could market my weaned calves and how I can obtain that premium dollar for my calves. The powerful labor unions once controlled the packer industry and maybe still does, but with IBP they lost most of their power. Packers are in control of our markets. Feedlots know how much money it takes to finish cattle with feed prices so if a producer doesn’t do the math on the cost of gain, does it pay me to finish my cattle or send them onto the local sale barn? Poultry producers are now paid on each bird that major corporations tell them they are worth. Are we in the cattle industry prepared for Cargill/Tyson/IBP and others to tell us how much they are going to pay us for each lb of beef…I think sometimes, they already are.

     

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