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Veteran Advisor

DId you see the cattle inventory report?

DId you see the numbers? WEre did all the cattle go?   I would think that this market will surpass Rightones price forcast. 

Also I would think that this will hurt the american consumer more than the price of gas ever will. THis is also very bullish for pork and poultry. It will also pull a lot more dairy cows to the slaughter house.

How many of you have hedged yourselves out of this profit?

Any thoughts guys?

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Veteran Advisor

Re: DId you see the cattle inventory report?

Like Jim Hilker at MSU said in 2008-

 

no, ethanol didn't make US food prices go up. But it will.

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Advisor

Re: DId you see the cattle inventory report?

..I'm not an ethanol proponent...but I don't think ethanol is completely at fault here. It's more of a function of the people in this world (namely the Chinese) who want the same lifestyle as you and I have..and are willing to work every bit as hard or harder to get it. DDG's are still available to feed cattle..and they should be replacing some soybean meal...but the Chinese are buying any amount and more of the soybeans we can grow. I don't know about you..but I'm thinkin' I might be in the market for some fence..and planting a little alfalfa on a few acres of odd shaped areas. Maybe I can keep a cow or two busy mowing these old pastures. Smiley Wink

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Senior Reader

Re: DId you see the cattle inventory report?

Hedged a third of fats, might buy calls on softness that probably comes Monday.  Biggest thing that jumped out at me - dairy herd UP 1%.  Who can a guy believe?.............. We don't run cows on ground that can be cropped, diversification principles still apply.  I LOVE the volatility!!!!!

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Veteran Advisor

Re: DId you see the cattle inventory report?

I kinda thought we would be steady on dairy numbers Ray, so the 1% up kinda was a head scratcher.  A feloow tho who is in the export businesss told me that a lot of dairy heifers that were headed for the southern borders didn't go this last year so maybe they held back enough of them to keep us in the up.  However by the next report this number will be significantly lower. and that trend isn't gonna change very quick.

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Senior Contributor

Re: DId you see the cattle inventory report?

pup, could be very lucrative hobby on those odd acres. gettin to old to run to many but havent had any cattle on the place since 1981, and i still miss them. how sick is that! d7

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Senior Contributor

Re: DId you see the cattle inventory report?

The numbers shouldn't be too shocking.  As long as feed costs double in mere months, there's absolutely zero incentive to build any herds at this time.  I'd venture to guess we're at least three years away before we actually see herd sizes start to increase, and this will only happen if feed costs stabilize.  The short term of this is great for prices, but the long term is horrible.  Once people start to substitute for meat in their diet, it's very difficult to get them back.  In the past couple of years, those who warned to keep the freezers and pantries stockpiled full of food were deemed crackpots.  Maybe, they were right all along?

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Senior Advisor

Re: DId you see the cattle inventory report?

Making a financial  decision from the expertise of a government report is about as reliable as the latest story at the local coffee shop---on the other hand it keeps the discussion here in high gear --won't bet the farm either way---trying to "feed the world" is a very disruptive jingle for the grocery  buying US citizen wanting cheap food and a government that want's a full throttle export ideology  ? It will be interesting to see which one plays out !

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Veteran Contributor

Re: DId you see the cattle inventory report? another yawner

no real suprises. 

Big dairies keep adding young cows ( more sexed semen used ) and the bigs in that business are getting bigger. 

They are a very vital supply of usa grind beef and that trend will be even moreso in the future.

 

Expect dairy cow numbers to increase 15 to 20% over the next 5 years and beef cow numbers to decline perhaps another 15% then maybe stabilize.

 

Beef folks have to deal with REAL economies...dairy folks well that's another governmentized agri market.

 

It's a good thing the usa has the globe's cheapest meat protien supplies, thus we are now the World's largest beef exporter.

 

Heck without the exports, this market would be in the tank.

 

And with a relatively high feed cost index base it makes sense to export herds rather than build em.

 

Been a ton of live beef cowherd exports to Russia the past 2 years.

One outfit I know of...sold out everything in the usa and exported over 5,000 head of Angus and Herfy cows to a ranch they bought in Russia.

 

It'll take a minimum of 5 years of $200 cwt calves in the usa...to maybe stabilize this deal.

And NO youth in the industry to operate said industry even then.

 

USA as a whole cannot capitalize a mouse ranch...thus real cattle are likely out of the question in the future too. 

 

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Senior Contributor

Re: DId you see the cattle inventory report?

I don't think it's fully realized just using cheap food and gov't wanting high exports.  You also have to throw into the equation the gov't wanting fuel in there as well because that use is about to become the #1 user of corn.  If you take the five billion out of the fuel equation, you free up close to 33 million acres to grow other grains when using the corn production national average.  The U.S. and World carryout figures would look significantly different than they currently do.  We could take the ethanol carryouts and subtract them from the gasoline carryouts which would still leave over 210 million barrels of free stocks.  This would still be above the 20 year average. 

 

Let's assume the problems happening in the World now continue to escalate.  This will drive energy prices through the roof.  Because grains have hitched themselves to that wagon, they will follow along.  How long will it be before we have people protesting on the streets because they can't afford food or energy?  Everyone is always looking for the Black Swan event.  It's way too early to tell, but we might just be witnessing the beginning of one.  Long terms, this doesn't look good at all from where I'm standing.  Yesterday, the export shipment pace of corn dipped below year ago levels.  It appears at the pace we've been going the past couple of months that within a week or two soybean shipments will fall below year ago levels.  While the demand might be high out there for U.S. grain overseas, we're not shipping it to them.  The more countries that protest trying to overthrow their gov't the less likely it is we ship them grain. 

 

As things are, we're all just sitting here waiting for the next shoe to drop.  It wouldn't surprise me at all if the Saudi's don't start protesting and trying to topple their gov't within the next couple of weeks.  Since we've hitched our wagon to Israel, we could be a lot deeper into this thing than most people realize.  When Carter lost Iran, the outcome was far from rosy.  It appears we're on the brink of losing Egypt, Jordan, and in due time Saudi Arabia.  To say the least, I'm a little spooked by all of this.  Unfortunately, we haven't quite hit my price targets for 2012-2014.  My finger is getting awful itchy in here as we might just be close enough. 

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