The major driving force in our local market has been light receipts.
In the state of Alabama alone we have sold 34,000 fewer cattle than last year
and this trend is the same wherever you go. With the limited availability of cattle to go
to their customers, order buyers have been forced to bid more eagerly. Most
sales across the state reported calf prices 2.00 to 3.00 higher. Its supply and demand at its purest, as the
beef industry lets these market dynamics play out with very little government interference
for the most part. Fundamentals are lined up in a row for a feeder cattle
market surge, including; improved weather, a spring rally in beef cut-out
values, a rebounding economy along with an all-time record-high stock market,
and last but clearly not least the well-advertised lack of supply. But when possession becomes more important
than the bottom line it can’t last forever. On the other side of the market, the feedlots
and packers are dripping so much red ink it looks like Freddie Krueger has been
keeping the books. I know it may not seem important to us how much
money a feedlot or packer is losing, but keep in mind the guys who buy our cattle
at the sale have to sell them to someone.
Most of the people they sell them to are somehow tied to a feedlot or
packer. There may be some lag time but
if the feedlots are losing money because of high feeder cattle prices it will
eventually trickle down. However with
total cow numbers at 1950’s level and no increase in sight, it doesn’t look
like the supply is going increase anytime soon. The competition for every calf
will remain high. With the sunshine
getting warmer and the drought all but gone in the southeast the demand for
cattle suitable for grazing should remain very strong.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.