Whether or not the "R" word is actually applied to the U.S. economy, there's no doubt things are slowing down. Why else would the fed be loaning more money for longer periods to banks, mortgage companies setting up bail-out plans for homeowners, and Congress doling out $600-$1200 to every American that has a pulse?
Whatever you choose to call it, the current period of tightening credit, higher prices for basic commodities like oil, and higher unemployment (businesses cut 60,000 jobs in February), will affect beef and cattle prices. It probably already has. When money's tight, at the meatcase do you buy $8.99 a pound steaks, $3.99 a pound pork chops or $1.99 a pound chicken leg quarters? Do you go to the white table cloth restaurant for Steak Diane, or to the Value Menu at Wendy's or Taco Bell?
These are pretty basic questions, with fairly obvious answers. But they have big implications for cattle owners, feeders, packers, meat wholesalers, restauranteurs and retailers--ie, everyone in the beef chain. They talk about how some products like Spam are recession proof, but beef is not.
No matter how diligently and correctly an individual ranchers takes care of his business, he is only one link in a much bigger chain--and all the links are interdependent. We're all in the boat together and will sink or swim to a similar extent.
Welcome to the real world.
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