Skip to comments.The Coming Crash in Ammunition Prices
Posted on 06/08/2014 4:00:42 AM PDT by marktwain
The Obama caused bubble in ammunition prices seems ready to bust. Over the last few years people have seen ammunition prices double or triple. Handgun and rifle ammunition has been hard to find at times. .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.
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. While the quantities were only a small percentage of total production, the raw figures fueled conspiracy theories. Obama administration 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 that 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 war, this ammunition was not being fired in combat. Most of it was not 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 shells 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 becomes less. Then demand drops, likely below pre-bubble levels for a while.
In the meantime, manufactures cannot stop production instantly. They have orders in the pipeline. They have supplies coming in that they 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, demand drops suddenly, but supply cannot drop as quickly. As supply took a while to spin up, it will take a while to spin down.
This means that retailers and wholesalers will be saddled with a glut of merchandise that they cannot sell at the current high prices. They will have to put it on sale. Lower prices bring about the expectation that prices will fall even further. The prices crash.
That is when a prudent person buys what they want, at very good prices. Demand will not stay at the artificially low prices of the crash. The new crop of urban, hip, shooters will want to feed their equipment, and the new 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 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 4 cents per round. At the lowest, we might see .22 cartridges below $10 for 500.
©2014 by Dean Weingarten: Permission to share is granted when this notice is included.
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What bothers me is that we’ve gone since the 2012 election without being able to buy 22 ammo easily while shotshells have been easy to find. 22LR Is the ordinary simple stuff which people use to put food on the table in hard times and somebody in our government is bothered by that possibility for some reason. By the same token, shotgun sports are a pastime of the well-off and Bork obunga has to know that the fat cats who back him would come down on his hiney like a ton of bricks were he to mess with shotshell availability. That’s despite shotshells using far more lead and powder than 22 ammo.
.22 Ammunition takes dedicated, extremely expensive machines to manufacture. The manufacturing capacity cannot be increased easily and quickly. The political crises created by the Obama administration have bumped up the demand for .22 ammunition for the reasons that you have mentioned.
The demand for ammunition stems from a fairly new awareness of multitudes of the American public about what my father passed on to me about 1960. Ammunition shortages happen, and it is a good idea to have a stockpile. The uncertainty of the Obama administration, the attack on second amendment rights, and world wide conflicts escalating with the current administration channeling a combination of Neville Chamberlain and the Muslim Brotherhood make it hard for any but the most obstinately polyannish to be unconcerned.
There are about 80-100 million American gun owners. Millions of them are new, thanks to the Obama administration. A majority of them own a .22. Rimfire ammunition is not practically reloadable (yes, there were a few kits sold in the 1980’s). Most people did not buy 5,000 rounds as a strategic reserve. Most probably had less than a box on hand. Suddenly, tens of Millions of people became aware and thought that a thousand rounds of .22 would be nice to have. Maybe a couple of thousand. Demand for .22 has historically run under 4 billion rounds a year in the United States, which is by far the largest market in the world. My friend Alan Korwin reports that the U.S. manufacturing capacity is 4.2 billion rounds a year.
Suppose 50 million Americans decided that they would like to have 1,000 rounds of .22 on hand for a rainy day, rather like I did in the 1970s. That is 50 billion cartridges, or about 12 times the annual manufacturing capacity for .22 ammunition in the United States. My observations show me that virtually every .22 manufacturing plant around the world is running flat out making .22 ammunition for the American market, and it all gets snapped up as soon as it becomes available, at prices about three times the rate of even a year and a half ago.
Basic economics: when demand outstrips supply, prices go up until the demand drops to supply levels. This puts money in the hands of suppliers, who then ramp up production to increase supply. It is happening, but it will take a while.
You can always go to gunbroker.com and buy all the .22 ammo you want ... at vastly inflated prices.
My WalMart is now always fully stocked in all rounds they inventory, except 22LR and 22MRF. Whatever they get sells out in about 30 minutes to an hour. The reason is that they do not price gouge like many on-line suppliers.
How .22 is made. CCI plant.
I visited the local Cabelas on Fri(6/6)morning and NOT a
single box of 22cal. in the store.It’s been like that for
almost 2 years. ?????? When in America has it taken that long for supply to catch up with demand? There has to be other reasons at play!!!
With .22 at 13 cents a round and 7.62x39 at 24 cents a round most of my plinking has been SKS and AK related - more than twice the bang for less than twice the bucks.
I am not convinced that we are close to a crash.
22 LR (other than the the quiet, powderless Aguila) is still over $0.10 a round unless you have a quantity limit (in which case shipping make it very expensive) or a huge membership fee. 22 LR doesn’t stay on the WalMart shelves for very long because there’s a line before they even stock the stuff, and they have a 3 box limit. We may have somewhat caught up with the demand, but there are a whole lot of shooters who suddenly decided they want a lifetime supply of 22 LR, for themselves and for their kids. We have a whole lot of shooters who have decided they want to be proficient just in case there is a need, and not just have a gun in the corner or in the safe. There are a whole lot of new shooters who are joining the older ones and shooting regularly (I know - my last three trips to a range with well over 100 shooting stations have included waiting for my turn, or shooting 200 yards when my plan was to shoot 100 yards).
No, no other reason than an unusually persistent demand for them. Cabela’s most likely pushes the bulk of their 22LR and 22MRF sales through their online operation because I see them there more than in stores. I also see them come into WalMart, but you just have to be there when they get put out on the shelf.
The demand is there because nearly everyone now has it in their mind that their “stash reserve” has to be at least 3000-5000 rounds. So they buy until they get that, then start shooting the overage. The problem, though, with everybody doing that, production still can’t meet demand.
I bought a box of .22LR three days ago at the local Sportsman’s Warehouse in North Denver pretty cheap. And, they had a large quantity of it there.
For all other ammo I use, I go to Freedom Munitions.
I suspect prices will come down from their peak stratospheric levels, but probably not to pre-bubble levels. I am pretty well stocked accross the board, but found myself short on 9mm Makarov for which current typical pricing is about $15 to $20 per 50 rnds.
The new reality will be far higher than pre-bubble pricing and shooting will forever be an expensive proposition for the average shooter.
I agree. But I do see some signs of overstocking leading to price reductions. One case: I have a 1936 MAS that shoots 7.5X54mm French. Darned hard to get a year ago (almost impossible) and averaging about $2.25/round.
This morning at Ammoseek.com I spotted them (same as I’d bought 8 months ago at $2+/rnd) at SGA Ammo for .85/rnd. I bought 100 rnds.
Overall, though, I don’t think we’ll be seeing 2 and 3 cent 22LRs ever again.
Years ago, I attended a number of Appleseed events including one of their week-long boot camps. Their blog suggested bringing a 22LR long gun in addition to a personal “battle rifle”. As I’m sure you already know, their pick for the 22 is the venerable Ruger 10/22. After some modifications, it becomes the Appleseed “Liberty Rifle”.
I did the calculations, and the math told me the savings on 22LR ammo vs the .223 ammo I would normally have shot would be enough to pay for the Ruger. So, that’s exactly what I did. Bought the Wal-Mart 10/22 special, dressed it up with Tech Sights and some Volquartsen thingees...and lots of 22 ammo. One of the best weapons decisions I’ve made. Not to mention...it’s just a lot of fun to shoot.
I fear the shortage has put a crimp in that aspect of the Appleseed program.
I haven’t bought any ammo other than shotshells since 2012. Funny thing, prices on shotshells haven’t really changed much and, again, shotshells consume a lot more lead and powder than any common cartridges.
Agreed, and it was already too expensive.
I have used this guy ever since I was in Blackwater USA/Worldwide - most of the guys get their ammo from patriot!
.223 - 500 rd case = $185 / .37 ea
Some guys bought pallets of ammo...reliable and trustworthy.
I reload several rifle calibers. Have plenty of components, but the hardest to find in brass. It is VERY expensive for rifle calibers. Most available brass selling at $75 per hundred.
I like to shoot my 30-30 and .348 lever action rifles. Finding 30-30 brass was/is still difficult.
I look at our local WalMart ammo shelves nearly every time I go there. They certainly are NOT restocked.
But there are a lot of “hunters” who live and hunt game here. Many from outside the area.
It is not over yet. But they may be right, about ultimately having a correction. Unless Obozo totally collapses the system. I believe he fully intends to do so, unless we stop him. I see no indication Congress has the balls to act.
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