Opinion: Prices We Didn't Expect To See
Some words and terms simply don’t go together – words like cerebral and all-star wrestler, heavy-muscled and Jersey cow, or thin and show heifer. I’ve been following the market for quite some time and two terms that simply don’t go together in that arena are $200 and per-hundredweight; still, we've seen some three-weight calves bring $2/lb. in the last couple of weeks.
January 5, 2011
Some words and terms simply don’t go together – words like cerebral and all-star wrestler, heavy-muscled and Jersey cow, or thin and show heifer. I’ve been following the market for quite some time and two terms that simply don’t go together in that arena are $200 and per-hundredweight; still, we've seen some three-weight calves bring $2/lb. in the last couple of weeks.
I’ve always gotten a little nervous when people start talking about new price ranges, and never seeing certain price levels again. Still, it's mindboggling to think that it wasn’t that long ago when we were talking about $100/cwt. five-weight steers and thinking that wasn’t too bad of a price. Now we're thinking $1.50 is a range that’s a whole lot more likely. That's a 50% increase in fairly short order!
While you can’t find a cow-calf guy complaining about recent price levels being too high, those price increases have translated into higher bred-female and bull markets as well. Already this year, we've seen that producers can expect an extra $500 to $1,000 in bull costs, for example.
It's ironic that while I’ve been a sharp critic of ethanol subsidies from both a philosophical and economic standpoint, today’s price ranges probably wouldn't be possible without ethanol subsidies. The higher grain prices brought to us courtesy of the subsidies fueled a lack of profitability and fairly sharp liquidation in our industry, which correspondingly brought higher prices. There may be fewer calves and fewer cattlemen but the smaller industry appears to be positioned for some pretty good times as we overshot the mark a little.
Just like writing "2011" on my upcoming checks, it will take me some time to get used to these new price levels. But I have to admit that I like the sound of $150/cwt. six-weights and $200/cwt. three-weights.
--Troy Marshall
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