Posted by JD Seller on October 15, 2016 at 19:52:39 from (208.126.198.123):
Is there going to be a profit in cattle this year???? Yes corn is cheaper BUT the fat market is 30-40% down too. The futures are not looking great either. Cull cows are in the dumps so I think that will limit replacements being held back. Many guys will try and get another calf or two out of that old cow that will hardly bring $400-500 at the sale barn.
What leads me to thinking that the cattle market is NOT going to recover much if any is the supply and demand picture. There is a wave of MEAT in the pipe line/stores right now. Pork and chicken are beating the heck out of the market share due to price. Pork loins at $1.50 a lbs., retail price, is hard to compete with. Chicken can be bought in the $1 a pound range pretty easily too.
On the production side the pig confinement barns are popping up like weeds here in Iowa. They are Full right now too. So that is another wave of meat that will be competing with beef next year. Also there are many farmers harvesting corn as silage and high moisture corn at volumes not seen in many years. Many of them are thinking that cheap corn will work being feed out over selling it at market. This pressures profitability in two ways. One, the demand for feeder cattle will be brisk. So much or all of the lower feed savings is going into buying the feeder calf. Two, the increased production just adds more meat to the market place putting more down ward pressure on prices.
Then add in the likely hood of an economic recession in the next 12-18 months and you have tough times looking at us. The general economy is not good. The election is causing some wariness but I feel it is deeper than just that. We never really recovered from the recession of 2008. The numbers have been cooked to make it look like we have but in reality we have not. This current economy of the US is vastly different than it was in the past. We do not create as much "NEW" wealth as we used to. Much of the current economy is just handling the same dollar many times in a "service" economy. This difference makes things much different as there is not much of a cushion in this structure of jobs/economy.
So I just do not see anything that points to anything pushing any of the economy up wards very fast. I think it is a time to be very conservative in financial dealings.
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