Ammo prices about drop?

[Ohiosam]

The Obama-caused bubble in ammunition prices seems ready to bust. Over the last few years gun owners have seen ammunition prices double or even triple. Handgun and rifle ammunition has been hard to find at times and .22 long rifle ammunition tripled in price over the last 18 months. People would line up to buy ammunition at prices two and three times the level that they were just two years ago. But all of that is about to change . . .


Ammunition supply looks as though it is ready to catch up with demand. Centerfire pistol and rifle cartridges are available on most store shelves. When I walked into a local Wal-Mart this morning, their were over 30 signs on the ammunition case indicating a rollback of prices by 10-15%.

In classic economic fashion, the bubble was fueled by actions of the federal government. Many federal agencies bought enormous quantities of ammunition. The Obama administration’s actions fueled fear of coming shortages, gun bans, registration of ammunition sales, even potential low level warfare. All of this led to the current bubble of ammunition sales.

In response, the economy reacted the way free markets are supposed to work. Ammunition suppliers started running their manufacturing plants day and night, adding additional shifts. Importers scoured the world markets, trying to buy everything they could to satisfy the insatiable demand. Foreign manufacturers bumped up their production to try to fill the desire for more and more ammunition. Ammunition production was at the highest level ever for small arms, short of war.

But unlike during wartime, this ammunition wasn’t being fired in combat. Most of it wasn’t being fired at all. It was being stored against future need. Very little was actually being used.

There are limits to this sort of demand. I gave away a couple of thousand .22 rounds to make a point. A person who only had 37 .22 rounds out of a box of 50 is well justified in wanting a thousand or two, or a case of 5,000 “just because”. Once they have the 5,000, their desire for more is reduced. Ultimately, demand drops.

In the meantime, manufacturers can’t stop production on a dime. They have orders in the pipeline. They have raw materials coming in that they may have no storage space for. They have employees that they have trained and who they do not want to lay off. For all these reasons, when demand drops, supply can’t drop as quickly. Just as supply took a while to spin up, production will take a while to spin down.

This means retailers and wholesalers will be saddled with a glut of merchandise that they can’t sell at the current high prices. They will have to put product on sale. Lower prices bring about the expectation that prices will fall even further. The prices crash.

That’s when a prudent person buys what they want, at very good prices. Demand won’t stay at the artificially low prices of the crash. The new crop of young urban shooters will want to feed their equipment, and overall demand will be higher than it was before the bubble. But it will take a while to settle out.

Metal prices have already fallen from the highs of the bubble. Copper and lead prices are far lower than they were. You will know that the bubble is close to the bottom when you see .22 LR on sale for below four cents per round. At their lowest, we might just see .22 cartridges below $10 for 500 again.

©2014 by Dean Weingarten: Permission to share is granted when this notice is included.

 

[oakswamper]

Yea, but gas prices will be $5.00 in a few months ;(

 

[MK111]

I'm on the other side of this coin. And don't really see it happening. IMHO the government purchase contracts did nothing to cause the ammo shortage.
The shortage was caused by a shooting public scared by the thought of no ammo being available in the future. Doing gunshows I think I seen the real buying panic of ammo. Shooters that would in normal times buy maybe 2-3 boxes of 50 rounds in 22LR would now buy 5-10,000 rounds at a triple the price if they found it. That is panic buying.
The same thing happened with centerfire ammo but to a slightly lower pace. The average American shooter shoots many times more 22LR ammo than centerfire ammo.
Ammo purchases are slowing down overall but it's still impossible to keep up with the 22LR demand. Put 22LR 50 round box on the table for 5.00 and it's gone immediately. Some of the dealers will buy it off your table for 5.00 and put on their table and sell it for 6-7.00 but at a much slower pace.
That's how I see it. I wish it wasn't that way but that's my view.

 

[brock ratcliff]

I hope this is correct. I've bought a total of 100 rounds of 22LR since this nonsense started. Unfortunately they were solids and sucked for my purposes (squirrel killing). I look forward to a good supply of hollow points.

 

[MK111]

I hope this is correct. I've bought a total of 100 rounds of 22LR since this nonsense started. Unfortunately they were solids and sucked for my purposes (squirrel killing). I look forward to a good supply of hollow points.

I recommend you purchase a "Hanned" type of 22LR resizer to correct those solids for hunting.
The original Hanned resizer was a jig that you put the round into and filed off the point to make it a flatpoint style bullet. No loss of accuracy and deadly on small game. The jig is setup to put the round in from both ends for different lengths of a finished bullet.
There is another type of bullet resizer that is a die you put into a reloading press that reforms the bullet in the finished round. I believe that type comes with 4-5 different nose designs.
Both work wonders on 22LR solids.

 

[Jackalope]

I hope this is correct. I've bought a total of 100 rounds of 22LR since this nonsense started. Unfortunately they were solids and sucked for my purposes (squirrel killing). I look forward to a good supply of hollow points.

Good luck. Even online you still can't touch a 500 box of federals for under 60 bucks. Far better than the 100 a box people were buying them at gun shows for. Even the cheap agulia stuff is 40 bucks a box. You'll see it drop though, manufacturers try to hold on to high prices for as long as they can. It's like gas. It'll jump 40 cents over night because someone in Saudi Arabia had a bad cholesterol check, but then take three months to come back down. People have been hoarding enough .22lr to give them a lifetime supply. Thus removing themselves from the demand market for years to come. Like ARs. A year ago you couldn't touch one for under 1,000. Now I see tem all the time in a package deal with 250 rounds of ammo, and six 30 rd mags for $650.

They like to say it has to do with metal prices, demand, blah blah blah. Its plain and simple price gouging. It doesn't cost them any more to produce a 500 rd bulk pack today than it did 5 years ago. I can still go to walmart and buy a box of 180gr 30-06 for 17 bucks. The same price it's been for 10 years. Box of 50 38 spl 20 bucks. Id like to know what their profit margin is on a box of .22 compared to 30-06. I bet it's 10x what the 30-06 margin is. But idiots are willing to pay it and that's half the problem. The other half of the problem is people buying it off the retail shelves and taking it to gun shows at 100% markup creating an artificial shortage.

Similar to how they claim oil prices dictate gas prices. Gas has tripled over the last 10 years but a quart of 10w 30 is about the same.

 

[Huckleberry Finn]

They like to say it has to do with metal prices, demand, blah blah blah. Its plain and simple price gouging. It doesn't cost them any more to produce a 500 rd bulk pack today than it did 5 years ago. I can still go to walmart and buy a box of 180gr 30-06 for 17 bucks. The same price it's been for 10 years. Box of 50 38 spl 20 bucks. Id like to know what their profit margin is on a box of .22 compared to 30-06. I bet it's 10x what the 30-06 margin is. But idiots are willing to pay it and that's half the problem. The other half of the problem is people buying it off the retail shelves and taking it to gun shows at 100% markup creating an artificial shortage.

During the initial panic, my thought was that they probably had a higher profit margin on .223 and thus were making those instead.

I think the opposite on the .22 - there is probably little profit margin at what the old prices were, so there is no sense in expanding production because they know the price will go down.

If the price margins are high on the .22 (and they very well may be), why haven't we seen new manufactures enter the market? They've had almost a year and a half to do it.

 

[brock ratcliff]

I recommend you purchase a "Hanned" type of 22LR resizer to correct those solids for hunting.
The original Hanned resizer was a jig that you put the round into and filed off the point to make it a flatpoint style bullet. No loss of accuracy and deadly on small game. The jig is setup to put the round in from both ends for different lengths of a finished bullet.
There is another type of bullet resizer that is a die you put into a reloading press that reforms the bullet in the finished round. I believe that type comes with 4-5 different nose designs.
Both work wonders on 22LR solids.

Thanks for the tip, Frank. I just head shot the few I killed this fall, Mason however, blew holes through quite a few only to watch them scurry off. My guess is he will be shooting them with his .25 cal Marauder this fall, so we will likely avoid the 22 cal stupidity. He's getting a scope cam for his birthday so maybe he'll be able to convince a few of you to try airguns...that thing is impressive!

 

[Jackalope]

During the initial panic, my thought was that they probably had a higher profit margin on .223 and thus were making those instead.

I think the opposite on the .22 - there is probably little profit margin at what the old prices were, so there is no sense in expanding production because they know the price will go down.

If the price margins are high on the .22 (and they very well may be), why haven't we seen new manufactures enter the market? They've had almost a year and a half to do it.

Come on man. You can't tell me a 550rd box that was 17 bucks 2 years ago and now costs $55 somehow costs $38 more per box to produce. First they got rid of the "50 free rounds." And packaged them at 500. Then they went to the 250-275 round boxes. Quantity fell, prices rose, margins soared.

 

[Ricer2231]

Not really a drop in price but a good price.

 

[MK111]

Come on man. You can't tell me a 550rd box that was 17 bucks 2 years ago and now costs $55 somehow costs $38 more per box to produce. First they got rid of the "50 free rounds." And packaged them at 500. Then they went to the 250-275 round boxes. Quantity fell, prices rose, margins soared.

On the Dist. wholesale end haven't seen much of a price increase 22LR. When available there are 1500 round bulk buckets of 22LR for Dist. cost of 80.00 and the Dealers set it on the gunshow table for 150.00 and sold immediately.

 

[Jackalope]

On the Dist. wholesale end haven't seen much of a price increase 22LR. When available there are 1500 round bulk buckets of 22LR for Dist. cost of 80.00 and the Dealers set it on the gunshow table for 150.00 and sold immediately.

That same bucket was probably 35-40 bucks wholesale 2 years ago. So about 100% increase add another 100% between dealer and customer. Same thing really a 550 rd box that two years ago cost 17 bucks retail now costs 55-60.