01-18-2013 06:49 AM
A New Beef kill plant opens its doors and ramps up it's kill. http://www.argusleader.com/viewart/20130110/UPDATE
01-18-2013 07:16 AM
The plain view plant kills 4500 head a day. WHen the one you are citing goes full out it will kill 1500 a day. I do not think we are tlaking apples to apples here. And besides the reality is a shortage causes a price drop?
Hope that logic prevails in the corn pits real soon.
01-18-2013 10:33 AM
The price drop in the corn and bean market already happened, to the point reality set in and exports picked up. I don't think we have the grain to support new exports,nor has the market rationed grain. The kill plant in Texas was in an area decimated by long term drought , with fewer fat cattle and shrinking margins. Such things as hurican Sandy and a flu epidemic have not helped high end retail sales. Its the end retailer maintaining their large markup. So until packers can put there plants in the black this might not be the only closing.
01-18-2013 12:10 PM
The price pattern I've seen from a pipeline collapse and parabolic market moves can be different in my experience. Though I think the market limit down in cattle is simply a knee twitch reaction by traders that isn't significant over time. In my regional grain market the exporters IMO coordinate 'no bid' surprises to stimulate bushels to flow by relying on pure fear by insecure farmers. I call it the 'lemon-lime marshmallow surprise' and it depends on being unexpected and dramatic. The effectiveness depends on how strong hands are holding the supply and is less effective now than in former times. But, it might finish loading a ship.
A parabolic curve is more dramatic in that everyone is aware that supply is the issue. Meat supply is certainly not in that catagory and it makes no sense in bidding up prices to keep a slaughter house busy when the local supply is tapped out. In 2007-8 the wheat market went parabolic and took other commodities with it in the short run. The collapse came after buyers, exporters and others simply couldn't keep up with the potential risks involved. Physical prices ran away from futures even. Quickly there was paralysis as everyone waited to see what was happening next and then the lemon-lime marshmallow surprise appeared. No doubt it generated bushels, after the market dropped, when everything froze up. No trading, buying, selling.
I fully expect cattle to settle down. Herd size is small but there are cow/calf operators in other parts of the country besides the Southern Plains.
01-18-2013 12:37 PM
I don't agree with that POV. When the drought ends in the Southern Plains the cattle will be back. Thye cow/calf producer needs grazing not corn to produce calves, much of them on land not cropped. Take away pasture and winter wheat grazing and the options run out. I don't have the numbers but I'm guessing the cow/calf guys in other areas (Montana, Idaho, Wa - for an example) are licking their chops.