Making some sense of a topsy-turvy December cattle market

 

We’ve been willing sellers at lower prices because even those prices are still pretty good.

That is a misleading statement. Here’s why.

There is no such thing any more as a truly “free (fully competitive) market.” But…the cattle business comes about as close to it as one can find. One of the fundamental characteristics of a purely competitive market is that the sellers are “price takers.” A free market competitor can sell all the production he wants–at the going price. He has no control over price.

This leads to what is called the micro-macro paradox (or the “farm problem”). Look at the formula for Revenue. Revenue = Price X Quantity. So, if the individual competitor has no control over price, what is the only way he can increase his revenue? Yep, by increasing quantity produced.

So, industry wide, what does that mean? An overall increase in supply and commensurate price bust. It is coming boys and girls and that is why it is so important to work from the cost side rather than the revenue side. — jtl

by Troy Marshall in My View From The Country

December was an interesting time for the cattle industry. Cattle futures retreated and the fed market slid along with boxed beef as a combination of profit taking, the holidays, and large numbers of previously contracted cattle allowed packers et al to pressure the market. Feeders and calves also exhibited a rather precipitous decline, which was helped in part by limited offerings, fear, and simply the levels we started from. 

Everyone says cattlemen are optimists by nature. I’d argue that is generally the truth, except when times are good; that’s when we start looking for the sky to fall. We’ve been willing sellers at lower prices because even those prices are still pretty good. 

The reality is that the cattle market is very current regardless of the segment you consider. The basic supply-and-demand tenets are unchanged. In fact, the decline in fuel prices is the equivalent of a $95 billion stimulus package; those are dollars that go directly into the pockets of consumers.

As has been the case for quite some time, the cash has taken the lead over futures when it comes to market strength. The cash market has begun to rally back and, as previously mentioned, overall fundamentals remain strong. 

There will continue to be ebbs and flows, fear and greed, outside economic drivers and macro trends, some which have the potential to dramatically alter market dynamics in both the short and long term. However, as producers, we can take heart in the fact that the overall trend is intact. 

 

Environmental & Natural Resource Economics: The Austrian View

edited by

Dr Jimmy T (Gunny) LaBaume

Is now available in both PAPERBACK and Kindle

BookCoverImageMurray N. Rothbard was the father of what some call Radical Libertarianism or Anarcho-Capitalism which Hans-Hermann Hoppe described as “Rothbard’s unique contribution to the rediscovery of property and property rights as the common foundation of both economics and political philosophy, and the systematic reconstruction and conceptual integration of modern, marginalist economics and natural-law political philosophy into a unified moral science: libertarianism.”

This book applies the principles of this “unified moral science” to environmental and natural resource management issues.

The book started out life as an assigned reading list for a university level course entitled Environmental and Natural Resource Economics: The Austrian View.

As I began to prepare to teach the course, I quickly saw that there was a plethora of textbooks suitable for universal level courses dealing with environmental and natural resource economics. The only problem was that they were all based in mainstream neo-classical (or Keynesian) theory. I could find no single collection of material comprising a comprehensive treatment of environmental and natural resource economics based on Austrian Economic Theory.

However, I was able to find a large number of essays, monographs, papers delivered at professional meetings and published from a multitude of sources. This book is the result. It is composed of a collection of research reports and essays by reputable scientists, economists, and legal experts as well as private property and free market activists.

The book is organized into seven parts: I. Environmentalism: The New State Religion; II. The New State Religion Debunked; III. Introduction to Environmental and Natural Resource Economics; IV. Interventionism: Law and Regulation; V. Pollution and Recycling; VI. Property Rights: Planning, Zoning and Eminent Domain; and VII. Free Market Conservation. It also includes an elaborate Bibliography, References and Recommended Reading section including an extensive Annotated Bibliography of related and works on the subject.

The intellectual level of the individual works ranges from quite scholarly to informed editorial opinion.

FOLLOW LAND & LIVESTOCK INTERNATIONAL ON FACEBOOK

Check out our WebSite

Check out our Online Rancher Supply Store

Advertisements

About Land & Livestock Interntional, Inc.

Land and Livestock International, Inc. is a leading agribusiness management firm providing a complete line of services to the range livestock industry. We believe that private property is the foundation of America. Private property and free markets go hand in hand—without property there is no freedom. We also believe that free markets, not government intervention, hold the key to natural resource conservation and environmental preservation. No government bureaucrat can (or will) understand and treat the land with as much respect as its owner. The bureaucrat simply does not have the same motives as does the owner of a capital interest in the property. Our specialty is the working livestock ranch simply because there are so many very good reasons for owning such a property. We provide educational, management and consulting services with a focus on ecologically and financially sustainable land management that will enhance natural processes (water and mineral cycles, energy flow and community dynamics) while enhancing profits and steadily building wealth.
This entry was posted in Livestock & Meat Markets and tagged , , , , . Bookmark the permalink.

One Response to Making some sense of a topsy-turvy December cattle market

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s