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It’s Shipping Time

Written by Dennis Sun

It is the last of October; we’re seeing a lot of cattle pots around the county, and country roads are full of calves headed down those roads. It’s not the best of times to be selling calves, but in the livestock business, one takes the good along with the bad.

The calves in those trucks are certainly undervalued, and that is what hurts. But, don’t take it out on the truck drivers or especially not the brand inspectors. The truckers are always under more regulation as far as hours worked, and now, there is talk of them being responsible for the health and wellbeing of their loads. And the local brand inspectors are there to make sure that everything is legal and calves that are leaving the state get to leave. Especially don’t complain when you pay for the beef checkoff. That is most likely one of the reasons beef prices are not lower than they are.

As we have all heard, the talk around the scales is always in the form of a question – where is the bottom on these calf prices? After the last couple of weeks, no one is sure. There is some talk of calves going under one dollar a pound. After all, the average price that finished cattle brought last week was under $100, and that was the first time we saw prices that low since December 2010. Slaughter levels are high – or as they say elevated – so that would mean they should go down some more. As wholesale meat prices are pressured to drop, that should help at the grocery stores.

Packers are doing well these days, and they are killing lots of cattle, keeping the feedlots current and fed cattle weights lower. Drovers CattleNetwork says, if a feeder buys calves today to feed, and they bought those calves aggressively as they should, because of the economics of the situation, the cattle feeder has a greater potential for profit than their cattle currently on feed in their lots. Drovers also says that the situation today is almost the exact opposite of the situation a year ago when cattle feeders were delaying markets and fed cattle got so heavy. Fed cattle were down $3.32 from last week and off $25.61 from a year ago.

Drovers says, the biggest drag in the meat sector may be the 50 percent lean trimmings, which are those trimmings left over after the cutting and fabrication process. They say lean beef demand seems somewhat slow, as both 50s and 90s are experiencing depressed prices. The boatloads of Brazilian lean meat making their way into our meat markets can’t help either. Unlike Country of Origin Labeling (COOL), maybe we should just label beef from other countries, rather than marking American beef. That should be cheaper.

It is payback time. We say that cattle are undervalued today, giving the market fundamentals of supply and demand, but others said cattle were grossly overvalued in the market in 2014, 2015 and much of 2016. For the rancher in the hills trailing the pairs to the shipping corrals to trucks waiting to weigh and load calves, that doesn’t diminish the pain.