I ate lunch with a rep. from Federal today. We talked ammo as always. I asked him how XM193 is back in stores and distriutors. He told me 2 weeks ago the military cancelled 120 million rounds of ammo so it was released for public consumption. He said last year the US Govt. bought 1.3 billion rounds of 5.56. I asked about prices and he said that the cost of materials has quadrupled in the past few years and they have only moved prices up 40-55%. He said they make up for the loss on Premium ammo. (ie. GMM & Premium hunting loads). We also discussed the difference in the ammo, which there is none compared to what the military is getting. I thought it was interesting so i am passing it along.

The big question is, will ammo ever go down. The quick answer is not very much for quite a while unless commodity prices go down.

We discussed several other ammo related issues, but I wont bore you. Have a great night.

Scott

Addition to my orignal post.

I may have been misunderstood and like you I am not trying to start an argument. I do believe they are still making a profit on XM193. Just not as much as they were before and they are evening out their profits by charging a premium for premium ammo. You and I know there is no way FGMM 308 should be a dollar a round. They have about $7 in a box of 20 at the present time. This is where they are making up for profit loss. 5.56 cost them about .16 cents a round to produce at the present time. Distributors are the ones making a killing. If a guy had 1 million dollars to invest and be direct with Federal at this time, he could buy 5.56 ammo at less than .20 cents a round. Problem is, finding someone who can, will invest that kind of $$ in ammunition. Dist. do it, but are keepng the price around .38 cents a round to dealers. Have a good day. Scott

edited - 2/20 9:37 central time - I never thought this post would get this much excitement. The XM vs. M193 debate is interesting. Like you I have read all the info about the difference only to be told, there is no difference. Such as 855 & 855PD. Many people the PD to be lesser quality because it cost less. It is exactly the same ammo only there is no federal excise tax placed on it (11%) and this is why it is less expensive. It is reduced 11% because of who it is made for.

In out conversation, I was assured there is no difference in ammo be it 855 or 855PD or M193 & XM193, only who it is made for. The ammo is the same. I was informed, if a guy had 1 million dollars to invest in 5.56, they could buy it for less than .18 cents a round. Problem is, who has the capital to invest in that much ammo.

So, if we can pool together 1 million, we can do a group buy. LOL

Just my .02 cents

your such a tease.............

I'll take the first million . . .you guys can haggle over the remaining 119 !

Quoted: I'll take the first million . . .you guys can haggle over the remaining 119 !

Haggle?

If 120 million rounds were loosed on ARFCOM, the battle would be bloody and it would all be gone in 15 minutes.

Hmmm...this helps explain why CTD has 50+ cases on XM193 on the shelf.

Of course they want $250 per case of 500 so I am sure its gonna sit there a good long while.

120 million rounds of XM193 turned loose on the free market will be another interesting lesson in capitalism/free market economics

Gotta love greed! it will always make things swing

Yeah, supply & demand forces will work well if the ammo is released all at once, but if they drip it out to us gradually, Federal can continue to support higher prices, as demand will continue to exceed supply.

Wondering why they cancelled the M193 ammo? I guess they are using M855/856 ammo exclusively now that the M16A1s are dropping out of circulation. Bummer, as the M193 ammo would probably frag better out of those ubiquitous M4s than those green tips anyway.

Quoted: Yeah, supply & demand forces will work well if the ammo is realesed all at once, but if they drip it out to us gradually, Federal can continue to support higher prices, as demand will continue to exceed supply. Wondering why they cancelled the M193 ammo? I guess they are using M855/856 ammo exclusively now that the M16A1s are dropping out of circulation. Bummer, as the M193 ammo would probably frag better out of those ubiquitous M4s than those green tips anyway.

M855/SS109 is the standard NATO-wide...

The only reason ANY M193 would be purchased is for the A1s (Navy & Air Force)...

And lighter ammo isn't better.. For the M4, better frag -> Mk262 77gr...

Quoted: I asked about prices and he said that the cost of materials has quadrupled in the past few years and they have only moved prices up 40-55%

He may be correct that prices on brass ect.. have quadrupled in the past few years but when the materials originaly cost (dont know exact #'s) $.4 a round and went up to $.16 a round if they were just marking it up for the cost of materials it would have only gone up 20-25%. Where I work the process is totaly dependant on  Alluminum they have over 2 MIL. pounds on site at all times and use over 36K pounds a day and they have not marked their product up 15% the ammo makers are just capitolizing on a demand market . A local gun store has Wolf 223 for $189 per 500 thats $203 OTD I just got 3K online for $217 shipped per 1K as long as someone buys that $189 per 500 they will sell it and keep marking it up they had some 3 months ago for $159 it sold quick so up it goes but if nobody buys it it will go down after a while.

Dave,

Training ammo is still M193 for alot of units because they cannot get M855 for training and they are reserving M855 for sitein for their troops going down range.  We did it all the time at the range and most of the time we would use M193 for standard Quals.  For awile we would get Federal .223 instead of M193 due to it being a suitable sub for training purposes only.  

ffh

At least it's available.

Hmm... wonder if that is why you are seeing some Privi and PMC "sales"...?

I'm not trying to start an argument, but there is no way ATK, a publicly-traded company, is selling XM193 at a loss to the gun-owning public.  It is precisely the opposite.  They are using favorable market conditions to maximize their profits on this product.  They are not doing us any favors; they are returning maximum value to their shareholders, as they should.  

We are their customers.  Their goal is to get as much of our money with as little operating expense as possible.  Lately, the ammo industry has been doing very well at this.  

Quoted: I'm not trying to start an argument, but there is no way ATK, a publicly-traded company, is selling XM193 at a loss to the gun-owning public.  It is precisely the opposite.  They are using favorable market conditions to maximize their profits on this product.  They are not doing us any favors; they are returning maximum value to their shareholders, as they should.   We are their customers.  Their goal is to get as much of our money with as little operating expense as possible.  Lately, the ammo industry has been doing very well at this.

+1

Quoted: Quoted: I'm not trying to start an argument, but there is no way ATK, a publicly-traded company, is selling XM193 at a loss to the gun-owning public.  It is precisely the opposite.  They are using favorable market conditions to maximize their profits on this product.  They are not doing us any favors; they are returning maximum value to their shareholders, as they should.   We are their customers.  Their goal is to get as much of our money with as little operating expense as possible.  Lately, the ammo industry has been doing very well at this.   +1

It is not uncommon for manufacturing companies to "massage their cost structure" to maintain economies of scale on volume production.  It happens all the time - bury more of your fixed costs in the high volume parts so that it appears on the books as though you aren't making much, if any, profit on those parts.  This then leaves less fixed costs that need to get spread across your lower volume parts and allows for higher margins to be taken on them.

At the end of the day, it all boils down to whether the company/division is profitable.  I think we all know that ATK is profitable - very profitable.

Im in for 25K  for the right price

I wonder how much has been shipped to wholesalers and retailers at this point.  120 mil is a fair amount of ammo.  To make it easier to comprehend, that is 240k cases (500).  I doubt even Arfcom would buy all that at $250/k; not that I expect prices to go that low.

ETA
I have never bought any XM/M193 because I came to the game too late to get in on it at reasonable prices. I was tempted when Widener's recently got some in and priced it @ $362/k, but resisted.  Now, seeing how much could possibly be available, I will not even consider purchasing any unless it is <$300/k, and probably down around $250.  I will wager nothing as to how far it will drop if at all, though.

Quoted: I will not even consider purchasing any unless it is <$300/k, and probably down around $250.  I will wager nothing as to how far it will drop if at all, though.

Are you up from your slumber yet? You are dreaming.

The recent availability for $365/K, plus the printing of special boxes for XM193 did make me wonder if some supply was coming online. No way will the price go down to $300/K. I'll bet that 120M rounds is the last major production of M193 LC will ever see.

Quoted: We discussed several other ammo related issues, but I wont bore you. Have a great night. Scott

No we aren't bored. Continue please.

Thanks for the updates.

Quoted: Quoted: I will not even consider purchasing any unless it is <$300/k, and probably down around $250.  I will wager nothing as to how far it will drop if at all, though. Are you up from your slumber yet? You are dreaming.

The last brass case, 55gr, .223/5.56 I bought was some Fiocchi "military contract overrun " purchased last year @ ~250/k.  I have not bought any since because prices are too high.  I am very much familiar w/ current market conditions, thank you very much.

Quoted: Quoted: Yeah, supply & demand forces will work well if the ammo is realesed all at once, but if they drip it out to us gradually, Federal can continue to support higher prices, as demand will continue to exceed supply. Wondering why they cancelled the M193 ammo? I guess they are using M855/856 ammo exclusively now that the M16A1s are dropping out of circulation. Bummer, as the M193 ammo would probably frag better out of those ubiquitous M4s than those green tips anyway. M855/SS109 is the standard NATO-wide... The only reason ANY M193 would be purchased is for the A1s (Navy & Air Force)...And lighter ammo isn't better.. For the M4, better frag -> Mk262 77gr...

Not true, and incorrect on many levels.... ANG still use the M16A2 that uses M193. Last I heard, most have been to Iraq and Afghanistan. Secondly, many units employ a squad level Marksman SDM.... M16A2 or M16A4's with ACOG for long range 100M-550m. They use M193....Ask me how I know. Last but not least M16A1's have been out of circulation for at least 12 years.

So they due order it and therefore can cancel an order.

If it was $300 per k, Id probably bite..

CXS

Quoted: Quoted: If it was $300 per k, Id probably bite.. CXS bha dealer price is higher than that for 223 blue box

Oh well then, no bite..

CXS

Quoted: I may have been misunderstood and like you I am not trying to start an argument. I do believe they are still making a profit on XM193. Just not as much as they were before and they are evening out their profits by charging a premium for premium ammo. You and I know there is no way FGMM 308 should be a dollar a round. They have about $7 in a box of 20 at the present time. This is where they are making up for profit loss. 5.56 cost them about .16 cents a round to produce at the present time. Distributors are the ones making a killing. If a guy had 1 million dollars to invest and be direct with Federal at this time, he could buy 5.56 ammo at less than .20 cents a round. Problem is, finding someone who can, will invest that kind of $$ in ammunition. Dist. do it, but are keepng the price around .38 cents a round to dealers. Have a good day. Scott i am not a federal distributer, but i know what cost is on federal XM193, Distributors are not making the $, federal is charging them almost double what the military is paying.

Bryan that is true.  I found out that how much I was paying for my units on M855 and it was low.  Now that I am out of the military (.gov job will not allow me to be in the military due to mission) I have looked at 5.56 ammo for my agency and it is still low for the Winchester 55 grain Power Point.  A little over Wolf pricing.  I wish I could get it for that much .  

Lead and such has gone up a lot but that still does not account for the price increases.


Lead is under $2/LB
Copper is under $4/LB



Lead has actually gone done from 5 months ago by 25% or so. Ammo prices that I track have gone up 40% in that same time. How many lbs of lead are present in a 1k round case? 5lbs? 10lbs? Thats still only 20 dollars at the most in the cost of the case.


Big contracts get ammo we pay 450-550 per K for under 300K so every case of ammo the ordinary person buys someone is making 150+ just in profit.

It's strange... 2 years ago I was very stingy and bought only 1K of M855 for $250 and thought I may have overpaid.

Now, I salivate at the idea of $300 per 1K of privi partizan or XM193

I'm so glad I bought 10K when it was right at $200 per K.

Of course that makes it hurt even more when I shoot up the cheap stuff, and have to replace it at todays prices. :(

I still have about 4k rounds of XM193 that I'm saving for.....well, I really don't know.  I guess 'cause I feel bad shooting it up!  Almost as bad as saving my 6K rounds of SA in those nice little Battlepacks.

Maj

120 million rounds really isn't that much.  There is currently 148,274 active accounts on arfcom.  There's probably some with multiple accounts and probably quite a few that don't own an AR or any firearm for that matter, so lets just say that 2/3rds or arfcom would buy some ammo.  Split it up between 100,000 members and you only have 1200 rounds per person.

it's good to see the oil companies are not the only ones making a SMALL profit.

ost

'M193 ammo would probably frag better out of those ubiquitous M4s than those green tips anyway'

If anyone thinks that the military would cancel a contract for more effective ammo than M855 in a time of conflict, I'd say they were paying entirely too much attention to the bullshit 'fragmentation' argument on this site. The M855 'Penetrator' round was developed specifically to address field-identified deficiencies in M193. Perhaps M193 can perform better than M855 in a non-military role, but again, the most important consideration for military ammo is penetration. That means being able to shoot the enemy through heavy clothing, light armor, thin-skinned vehicles, underbrush, stud walls, heavy doors, etc. This was the failing of the M193, and that's why they finally cancelled it. Which should mean plenty of it for sale at decent prices for all those who use it.

Quoted: it's good to see the oil companies are not the only ones making a SMALL profit.

The price of commodity is BS.  Yes the price of metal has increased worldwide due to turd third world countries picking up on manufacturing.  So explain this to me:

If the US is losing manufacturing business as the pundits claim, decrease demand for metals in US should be offset or perhaps slight increase in turd third world countries.  So yes I bet an increase in metal prices but not as dramatic as accounts for the price on the 556/223.  

I submit the follwing evidence on my Metal Increase BS Claim:  I purchased a 1,000 rounds on Lith 7.62 x 51 for $525 shipped and 1,000 rounds Privi 556/75 grain $400 shipped.

How can I purchase 762 with twice the weight in lead copper bullets, brass and powder and pay only $125 more if prices quadrupled on metals alone?

Thusly......

I believe its profit induced for sure. I haven't tracked commodity prices and manufacturing costs or the economies of scale of ammo producers... YET I think they're definatly capitalizing on inflating prices.

Federal is making so many rounds = larger economies of scale = we should be getting those 120mil rounds at a cheaper price. Much cheaper.

Looks at 7.62x39 rounds of similar quality. More powder, more metal, more brass, more everything yet it sells for much cheaper then 5.56

Quoted: You'll be getting that ammo at exactly the price that Federal decides to sell it for. If it's too high, they'll lower it. If it sells, they won't have to. Does this have to devolve into yet another ammo price discussion?

Shouldn't this comment be posted here?

http://ar15.com/forums/topic.html?b=3&f=16&t=313837

Sorry, herr Field Marshall.  I couldn't stop myself.

Quoted: 120 million rounds really isn't that much.  There is currently 148,274 active accounts on arfcom.  There's probably some with multiple accounts and probably quite a few that don't own an AR or any firearm for that matter, so lets just say that 2/3rds or arfcom would buy some ammo.  Split it up between 100,000 members and you only have 1200 rounds per person.

Unless M193 drops below Wolf...

There will be quite a few less takers...

Wait, what?!  XM193 is not top-quality stuff.  It looks like hell and some of them are even dented.  So far all mine has gone BANG, but I can't imagine any .mil department or Corps accepting XM193 for their use.

So how does a .gov entity cancelling an order for M193, which is NOT the same thing as XM193, equate to a sudden flood of XM193?

Quoted: Wait, what?!  XM193 is not top-quality stuff.  It looks like hell and some of them are even dented.  So far all mine has gone BANG, but I can't imagine any .mil department or Corps accepting XM193 for their use. So how does a .gov entity cancelling an order for M193, which is NOT the same thing as XM193, equate to a sudden flood of XM193?

That's why it has the X in front of it. It's the stuff the military didn't want. If you pulled a round out of a soilders mag and compared it. You wouldn't know the difference.

Quoted: Wait, what?!  XM193 is not top-quality stuff.  It looks like hell and some of them are even dented.  So far all mine has gone BANG, but I can't imagine any .mil department or Corps accepting XM193 for their use. So how does a .gov entity cancelling an order for M193, which is NOT the same thing as XM193, equate to a sudden flood of XM193?

Actually this was my first thought and after writeing out a post I hit the cancel button as I figured everyone would laugh at me but I'll ask now. Even if said ammo hit the market wouldn't it be better quality stuff than what we get a chance to buy?  I figured if the .gov didn't actually purchase it then it wouldn't be considered "surplus" so it could be put on the market but wouldn't it be HIGHER priced than the dented stuff I've got?  

OK no one buy any for about 6 months the shit will drop in price. S&D

Quoted: Quoted: Wait, what?!  XM193 is not top-quality stuff.  It looks like hell and some of them are even dented.  So far all mine has gone BANG, but I can't imagine any .mil department or Corps accepting XM193 for their use. So how does a .gov entity cancelling an order for M193, which is NOT the same thing as XM193, equate to a sudden flood of XM193? Actually this was my first thought and after writeing out a post I hit the cancel button as I figured everyone would laugh at me but I'll ask now. Even if said ammo hit the market wouldn't it be better quality stuff than what we get a chance to buy?  I figured if the .gov didn't actually purchase it then it wouldn't be considered "surplus" so it could be put on the market but wouldn't it be HIGHER priced than the dented stuff I've got?

Mil ammo isn't exactly perfect looking itself.

Quoted: The price of commodity is BS.  Yes the price of metal has increased worldwide due to turd third world countries picking up on manufacturing.  So explain this to me: If the US is losing manufacturing business as the pundits claim, decrease demand for metals in US should be offset or perhaps slight increase in turd third world countries.  So yes I bet an increase in metal prices but not as dramatic as accounts for the price on the 556/223.   I submit the following evidence on my Metal Increase BS Claim:  I purchased a 1,000 rounds on Lith 7.62 x 51 for $525 shipped and 1,000 rounds Privi 556/75 grain $400 shipped. How can I purchase 762 with twice the weight in lead copper bullets, brass and powder and pay only $125 more if prices quadrupled on metals alone? Thusly......

   Your observations are correct, because the price increases are not due only to commodity prices.  

   First, commodity prices are having an impact, and I would not expect them to go down anytime soon, as demand from the increasing wealth and fast-growing economies in China and India is not likely to decrease anytime soon.  They are going to be absorbing massive amounts of raw materials for the forseeable future.

  Second, as you noted, there are other elements impacting supply and demand, besides just the price of raw materials.   The perceived quality of the product, as discussed here, affects the price we (customers) are willing to pay.  The perceived quality may make up a surprisingly large portion of the selling price.  

  Also, beyond just the weight of raw materials and cost of production, there is the demand for various calibers.  .223 / 5.56 seems to be very popular these days, which would drive the price up.

  Third, there is a war going on, and the fact that the military is using a large portion of the manufacturing capacity will tend to drive up prices on what is available for civilians.  

   Fourth, the elections seem to have spurred people to stock up now due to uncertainty about the future.  Adding further upward pressure on prices.

   So, we see the prices going up.  But if they are raised too far, they won't sell, so although it doesn't seem like it, there really is a limit to how much the prices can be raised.  It is all in the interaction of supply and demand.  

    Fifth, the deficit spending is causing inflation, and this is going to cause a continual  slow increase in the price just due to eroding purchasing power.  The more government spending, the more this will happen.

  Now, the release of all that XM193 on the market will tend to lower prices, but depending on all the other factors, it might only slow down the price increases.
   
     The portion of the price increases that is due to materials is probably permanent. However, the production demands from the war, and the political uncertainty will eventually pass, and then prices may go down slightly.  We will just have to wait and see.  

     The choice is wait and bet that the prices will go down later, or buy now and protect yourself from the chance that they will keep going up.