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Advisor
jrsiajdranch
Posts: 2,121
Registered: ‎05-03-2010

this is just stupid!

Gored the reason live cattle dropped the limit was due to the fact that Cargilll said they were closing a kill plant in Texas. 

 

WHy were they closing? Overworked employeees gettin paid to much?

 

NO!

 

did they have an animal welfare group shut them down?

 

 

 

NO!

 

Not enough supply to keep the plant open?

 

YES!

 

 

What?????

 

SO a lack of supply or a shortage and we get to have the commodity that is short get hammered!

 

Really just an upside down world we live in today.  Corn and Beans MIGHT get short and the world lights a fire under em.

 

Cattle are so short they have to close a plant and we drop the price the limit on the news.

 

Sucks to have livestock right now.

Veteran Advisor
Shaggy98
Posts: 4,016
Registered: ‎06-19-2011
0

Re: this is just stupid!

I've got a family member who has bought cattle for Cargill for about 35 years.  I think they send 1000's of head each week to the plant in Texas.  I'll try to pick their brain for info.

Senior Advisor
ECIN
Posts: 2,043
Registered: ‎10-17-2012
0

Re: this is just stupid!

Dang I REALLY hate to do this !!!! I REALLY do -- LOL -- but Jr. --- I  --- I --- huh --- I have to agree with you on that post -- lol Good one !

Advisor
jrsiajdranch
Posts: 2,121
Registered: ‎05-03-2010
0
Senior Contributor
k-289
Posts: 1,760
Registered: ‎05-13-2010
0

Re: this is just stupid!

Well  J R  the ole chickens are comen to the roost  - cargul is probably hit one point right being those moma cows aren't going to show up  ^ any time soon ---

Frequent Contributor
noreaster
Posts: 61
Registered: ‎01-24-2012
0

Re: this is just stupid!

I'm no genius buy any stretch of my back road imagination but, this is how I see it.

 

Drought in Texas=Lack of Feed

Feeders quit purchasing replacements=cows move north

Boxbeef price still better deal to purchase and move south instead bidding for live=Temporary Plant Closure.

Tempoary plant closure=re-tooling, technology update, government assistance.....?...?..?

Once cattle return=business better than ever......

 

(yeah yeah I know, I can't help it I'm a cup half full kinda guy.)

 

So like you say jr...  Why in the world would a closure have this kind of efFect?????

 

Market psychology changes to doom and gloom as demand is falling for beef, so much so that killing plants are having to close up shop.......Cmon.... Great news for the packers, I guess they'd need the odd carrot too.

 

Senior Contributor
GoredHusker
Posts: 1,709
Registered: ‎05-13-2010
0

Re: this is just stupid!

From what I gather, Cargill is going to maintain ownership of the plant.  However, it will not be reopening anytime soon.  When interviewed, they stated it will more than likely be idle for several years because it will be several years before numbers return.  According to the USDA reports, hay and forage are at 40 year lows.  I guess it's good that cow numbers are at 60 year lows.  Many analysts believe we could run out of hay and forage by the second week of May.  This isn't good considering the drought and how short the first cuttings of alfalfa will more than likely be.  There are a few guys already starting to cull herds pretty hard right now because cull cow prices are pretty good.  Everyone remembers what happened to the guys down south a few years ago holding on too long and remembering some of the prices they took.  There's a few guys talking about dry lotting cows through the summer, but most just don't have the feed to do it. 

 

I read a couple of days ago that in most places in the western cornbelt we're a foot of rain short.  Locally, it really won't matter if we get normal rainfall this spring as the pastures just took too big of beating last summer.  Everyone is going to have to stock 30-50 percent lower than normal.  With new water allocations being released, alfalfa will be a crop of the past as no one will have the water to grow it. 

 

Cattle are in a tough spot right now.  Cash prices are too high for most consumers.  You know it's getting bad when cheap fast food retailers start seeing sales declines like McDonalds posted a few weeks back.  I keep hearing these pie in the sky prices for fat cattle coming in April, but I just don't see it.  I also don't see the high prices some analysts are talking about for calves this coming fall because I believe the weather is going to keep feed prices too high.  I have the feed to drylot my cows this summer, but I'd be willing to bet I could make a lot more money selling the cows and the feed. 

Veteran Advisor
Palouser
Posts: 2,177
Registered: ‎05-13-2010
0

Re: this is just stupid!

Remember, traders are worried about 'technical' stuff, not physical commodity. Part of 'technical' is what they speculate other traders might do - face it, these guys know nothing about the cattle business except what they think they know. 'Low Margins' were mentioned in some information. It certainly wouldn't be out of bounds to trade on the language used by a press release. Margins means profit if the market isn't unlimited. That means losses, triggering leaps out of positions. Welcome to the futures market. Meanwhile all the traders will go hoime and pick up meat for the same price otr higher and not  even give it a thought.

 

So, does the market have it all 'priced in' by the time the public hears about it? Ha! Are you kidding me? The market NEVER thinks that far ahead. Too busy running scared that the next office over is going to take advantage of slow reflexes and the lions will get them. Herd instinct. Kinda ironic I'd say.

Veteran Advisor
c-x-1
Posts: 3,221
Registered: ‎06-26-2012
0

Re: this is just stupid!

[ Edited ]

not all traders, Palouser............in my world, EVERYTHING matters. NOTHING exists in a vacuum.

 

cattle had begun selling from ALL time highs a week before. ( ie. distribution by the strong $$ began probably 2 weeks before this news event came out which caused 1 limit down day. 

 

It's HUMAN perception/psychology/stronger $$, not simply the tech trader mind, don't y'all think???  Would'it it ALREADY be the probability in a downtrend -- to sell??? It's about balance of economics and the perception of such...it's always much bigger than a bunch of single minded traders that move a market.