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High cattle prices here to stay?

Discussion in 'Agricultural Operations' started by JBGASH, Jan 18, 2015.

  1. JBGASH

    JBGASH Senior Member

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    We sold are 2014 calf crop yesterday, the entire group averaged 510 pounds and brought $2.50 per pound or $1275.00 per calf. This is the highest price we have ever got in history. Any of you cattleman think these kind of prices are here to stay for while or will the market correct itself? I know beef is high in the store but the consumers & world market cant seem to get enough of it. From what I read the US cow herd is still at a 50-year low, anyone got comments on when this cow herd will get into the expansion mode?
     
  2. digger242j

    digger242j Administrator

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    I may give up hamburgers and start eating gasoline...
     
  3. JDOFMEMI

    JDOFMEMI Senior Member

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    Remember the reason the cow herd is at 50 year lows is because the last round of low prices broke all of the weaker players in the market. That removed the oversupply, and now the result is a price spike.
    Now many people are hearing of the money to be made in cows, and the herds will rise quickly to meet demand. there may be a year or two of good money before the oversupply comes around again, then the price will drop like a rock.

    The problem is that when the market price corrects, it does not go to the proper level, but it overshoots by a large margin, and that either enriches the survivors, or on the downside, wipes out all but the strong. Then the price comes back to reality for a while, but the seeds of the next move are already sown.
     
  4. watglen

    watglen Senior Member

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    The cure to high cattle prices is high cattle prices...
     
  5. CM1995

    CM1995 Super Moderator

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    I agree with what Jerry said. Seems to be the norm in some markets now a days. Just look at oil.
     
  6. Oxbow

    Oxbow Senior Member

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    I think that the cost of hay and the recent droughts in the Southwest may have had some impact on herd numbers as well in the past few years.
     
  7. Delmer

    Delmer Senior Member

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    No cattleman here, but if I remember right a cow has one calf a year, and that calf takes two years to produce it's own calf, so it takes basically three years to double the number of producing cows (accounting for bull calves). Guessing the industry WENT into expansion at the first hint of $3 corn, I'd guess the prices will really drop in two years (demand is not always as important as sentiment).
     
  8. Multiracer

    Multiracer Senior Member

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    Makes perfect sense to me, fuel prices came down so it is time to raise food prices, keeping my wallet about as thick as it was six months ago.
     
  9. Queenslander

    Queenslander Senior Member

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    Prices here reached 15 yr lows last year, thanks to ongoing drought and record slaughter levels,(it's better to sell em than smell em)
    Now, with the drought bent if not broken, cattle are in short supply and prices have been heading north.
    Still, we can only dream about the prices you guys are enjoying. At the moment we're getting around the same money per kilo that you are getting per pound, roughly about half, without factoring in exchange rates.
    As you say JBGASH, there is excellent demand for beef from around the world so we are looking forward to at least a few good years.
    Cheers, Greg
     
  10. JBGASH

    JBGASH Senior Member

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    Thanks to all for the responses. Timing will be important with this market for me, for I am somewhat more optimistic that the bull market will stay around for a while. Me and my son in law went to a special cow sale and purchased 34- 3-4year old bred cows in the 3rd period that start calving March 1 for $2455 per head. At this ridiculous figure I thought I had lost my mind for a minute and then reality set in. It was quite a cow sale with over 1100 head that brought anywhere from $2000 to $3200 per head. Seems as though everyone there came to buy with very few non buyers. If the market heads hard south it will be very painfull owning these expensive momma cows. Ken- I agree completely with your comment, that the cure for high prices is high prices, but in this case I hope they stay high for while...
     
  11. roddyo

    roddyo Senior Member

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    Cow numbers will never be what they was in the past but anyone who thinks this will go on forever is a fool. We are going to price ourselves out of the market. When those people leave it's not easy to get them back. When is the last time any of us ate lamb?

    One chicken can put more meat on the table in a year than a cow. Before you call BS do the math. 180 eggs a year that's putting a 9 to 10 pound chicken out the door. A 600 house chicken complex is like replacing 250,000 cows. That's why chicken is cheaper than beef and that's where part of our market is going to end up. IMO
     
  12. Delmer

    Delmer Senior Member

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    The math on hogs is pretty close to chickens as well (just a little harder to shrink wrap maybe?). Both follow the corn price more or less quickly. Cattle have a bit more lag. Sheep are weird, really too small a market to be significant. In the East they can average twins and lamb at a year, but there's other factors than corn price. I haven't been West in 20+ years, don't even know if there's any sheep left.

    I ate a lot of mutton in my life. Ever try Alpaca?-I don't think beef is going out of style anytime soon.
     
  13. roddyo

    roddyo Senior Member

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    Beef will never go out of style, it will always be the premier food. At this price it is a luxury for a lot of Americans. That's not good. If the bottom 25% just eat chicken one extra serving a week that's a lot of beef taken out of the food chain. What bothers me is most of the time a person eats what they was raised on. With these high beef prices we could have an entire generation that prefers chicken. Lamb had a good market until it got two high to buy. I would guess most people under 30 have never tried it.

    I'm glad someone knows what to do with a fat sucking 500 bull calf at $1,250.00 to $1,500.00 each because they are a lot smarter than anyone I know. Take their money and invest it wisely:)
     
  14. joispoi

    joispoi Senior Member

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    One thing that has effected the recent spike in prices is the world market. Russia cancelled all their beef (along with produce and grain ) orders from the EU in retaliation for the trade sanctions that were imposed after the Ukraine invasion.

    European beef prices are currently down.

    Russia is buying from Turkey and Latin America right now.

    Once Russia starts buying from Europe again, Latin American beef is going to be in oversupply.

    Food for thought.
     
  15. wrwtexan

    wrwtexan Senior Member

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    As a cattle producer in northeast Texas, most of the price spike has come from the droughts in the southwest over the past few years which reduced herd numbers dramatically. Hay was scarce all over Texas causing huge selloffs as we couldn't feed them paying $60-80 per bale when it could be found. Packing plants around Amarillo were shutting down last year and before as they couldn't get enough supply to keep working. With these top to bottom herd reductions or complete liquidations, there are not enough animals to meet the demand. Simple supply and demand economics. As long as people are willing to pay at the grocery store and supply remains tight, prices at the barn will stay good. Ranching dependent people stayed in and hung on are rebuilding their herds, and high prices are attracting opportunists or those who sold out back in, but keeping replacement heifers to grow a herd takes a lot of time and supply out of the market. Industry experts say this will take a few years to happen and in the mean time, those of us with calves to sell are doing well. We certainly don't want to go back to getting $1.50 per pound and trying to make expenses let alone any profit. Chicken is good and I eat a lot of it, but yardbird can't compete with some good barbecue, a juicy burger, or a good tender steak.
     
  16. lantraxco

    lantraxco Senior Member

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    The meat industry keeps feeding animals the GMO grains they'll kill off a fair chunk of their market eventually, that will affect pricing some... might take a few more years, but it will happen, I'm pretty sure.

    :my2c
     
  17. Delmer

    Delmer Senior Member

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    Same with hybrid grains, I want my meat fed only spelt and quinoa:D

    Sorry, that's disagreeing with you lantraxco. There's grassfed meat out there if you want it, but most people who have tried REAL grassfed meat don't like it, it's not what they're used to.
     
  18. lantraxco

    lantraxco Senior Member

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    I don't have a problem with hybrids, it's just a sped up natural process. splicing insect genes into a plant so it creates it's own pesticide internally kinda gives me the willies (No offense Willie59) and the other artificial constructs may be affecting the human body's immune system, even if it's only used as animal feed. Same goes for milk and other dairy products. I'm no enviro nut, but anytime a mega corp is making billions off a process I'm a little bit suspicious.

    Cheers

    :beatsme
     
  19. Multiracer

    Multiracer Senior Member

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    There's grassfed meat out there if you want it, but most people who have tried REAL grassfed meat don't like it, it's not what they're used to.



    I have to say this is a true statement. We eat beef at least twice a week, mainly grilled over a gas flame. Our local Heinens started carrying a grass fed line of products. I tried twice and the wife won't do it a third time. I could adapt but the extra price and the wife have steered me away. No pun intended. :D
     
  20. Scrub Puller

    Scrub Puller Senior Member

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    Yair . . . Multiracer. So natural 'grass-fed' is more expensive than 'grain-fed' in the US?

    Here in Australia it is the opposite . . . but of course we don't have the grain production that you folks have. To me grain fed is an acquired taste and is pretty much off the menu.

    Cheers.