Cattle Markets: High cattle prices follow high input costs

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Mother Nature makes a huge difference in just about everyone’s life! We all depend on water  to live, just as the crops and pastures do.  It is amazing what a difference timing makes too!  A split second can be the difference between winning and losing, while an inch of rain at the right time can be the difference between grazing or buying feed.

Marketing everything from toys to beef seems to be time dependent also.  Folks who sold cattle two weeks ago sure didn’t like the market, while folks who sold the week before probably like it a lot!  The difference in the two weeks was also probably a difference of profit or loss on thousands of cattle too.  Just the “little” swings in the fat market can make either a profit or a loss for feeders, yet it sure doesn’t reflect in the supermarkets.

Looking at the basics of the cattle business, a person would think we are in a good position to handle most things. A very small cow herd, decent demand and extremely high prices.  But those high prices also include the input costs and the every day costs of doing business.  It might take three times the amount of money to do business in agriculture as it used to and then a person has to find the right time to do it.

The cattle market is fantastic!  In the midst of a severe, large drought calves are selling near all time highs!  In a time when just about every steer or heifer put in the feed yard is a guaranteed loss, they are selling extremely high!  With no rain in sight, folks still have to figure out what to plant for the next season, and apparently the government, with TRILLIONS in debt is trying to figure out how to spend money!  It sure is a good thing everyone is optimistic!

Of course, opportunity comes in many shapes and sizes, and most of all they seem to come with a timing clause.  Take advantage when it knocks at the door or it will go away for another time.  When it does rain, it will be hard to tell how high some of these replacement cattle will get.  If it doesn’t rain, it will be hard to tell too!

It would be interesting, if not sad, to know how much money was lost in the feeding industry in the last few years.  There are plenty of cattle coming out with three digit losses, and the hedges, if there were any, had a hard time covering it with the basis so far off.  Of course, when you can’t deliver or take delivery of a product, like feeder steers and heifers, or fat heifers, it sure makes a person wonder what the CME is for.

We have a lot of opportunities coming at us.  Spring will be here before we know it, calves will start hitting the ground in full force, and hopefully Mother Nature will let it rain for a week straight!  It is a great market!  Take advantage of it!

Go to the auction! Get in the action! Raise some beef!

www.cattleusa.com

 



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