Cattle have dropped like a rock during this last week at the local auction markets, off as much as $6-$10 over a two-week period. The downward trend continued today, at the bellweather Oklahoma City market.
Drying up the credit markets with ill-advised mortgage lending, pulling most of their money out of commodities markets like the Chicago Mercantile Exchange products--both have caused the record price drop. These were factors far outside the purview of the local farmer or rancher. He had nothing to do with causing it, and could not prevent it if he wanted to.
In simple supply-and-demand economics, cattle numbers are down and prices should be up.
And yet he is the one paying the price. The big strings of feeder cattle are being held off the market by their wealthy owners, waiting for things to get better. The little guy can't do this, because he doesn't have the feed to keep them, and having gone to the expense of hauling them to the sale barn, can't afford to take them home. The little guy is stuck with whatever price he gets that day.
Fall cattle sales represent a year's wages for many ranchers, and a price drop of this magnitude is an unmitigated disaster. There is no kinder or more socially acceptable way of putting it.
If you have the feed and capital, you can wait out a market crash like the present one. Most individual ranchers are not in that category. When you read of all the banks being bailed out by the government, taking two or three months to straighten out the credit markets--think of the little guy, who had his credit line halved, if he can renew it at all, because of the lost equity in the sale of his cattle.
That's who's paying the price.
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