Where will all the beef go?

[cowman]

I think it is pretty apparent that there is going to be a whole lot of cow beef on the market this year. Now I haven't been out in west central Alberta for close to two weeks but when I was they were hurting big time. The cows were going into the hay fields and there won't be much to feed them this winter(and there is a pile of cows out there!).
Has the government got around to declaring any areas disasters for tax defferal of breeding stock? Last year they declared all of Alberta a dissaster area fairly fast. There is a major wreck coming down the line and I suspect about half the cow herd will have to go in these areas. Where are these cows going to go? Cargill doesn't slaughter cows and XL and IBP can only kill so many. The US I guess. Australian and New Zealand beef imports are almost double last year. Now why does the government allow this meat in when we are going to be awash in cow beef pretty quick, if not already?

[wilagro]

One of the fastfood outfits complained awhile back that there weren't enough cows in North America to supply there needs so were looking to Australia and New Zealand for supplies. Another ploy to lower the price I am sure. There should be enough North American cows this fall to supply them and then some. It is definitely a buyers market this year. I hope the consumers enjoy their cheap burgers and may their cholesteral level soar.

[cowman]

Well I haven't noticed the price of burgers or beef falling very fast and I very much doubt if it will. It's just like pork a few years ago when the markets failed. Prices never dropped one red cent at the retail level and yet they were buying these pigs for peanuts! It is not in the interests of the retailers to drop the retail price. When big business wiped out the small stores there was no reason to be competitve anymore. You buy up the competition and then the skys the limit.

[jmillang]

Yes there are cows going to slaughter but no as many as one may think. I looked at CanFax's numbers that they get from the grading agency and we are only killing about 11% more than last year. Also in perspective where are all the cows and is the drought that severe in those areas? I looked at this map comparing the 1996 to 2001 cattle numbers from census and even with the 2001 drought (although the numbers are fro July 1) there were very few areas that saw a decrease in numbers http://www.agric.gov.ab.ca/images/economic/census/cd190108.gif, maybe we are just going back to 1996 numbers.

In CanFax's last report they say that cows are moving to southern Alberta, and into parts of Saskatchewan and BC. Some are even moving to Manitoba, Quebec and Ontario.

Cowman you are right the retail prices do not necessarily reflect a direct relationship with cow prices or even calf prices. Retailers will typically price their product at what the market will bear, not based on margins or cost plus. The packer though uses a blend of cost plus and what the market will bear, and as we move further down the production chain you have the cow calf guy at a price taker never mind a price setter.

As we have seen in many other discussions you need to decide as a cow calf producer what business strategy you are following, a commodity based beef system or a differentiated strategy working to increase the value (not price) of you production.

What are cow calf managers doing? are you liquidating, are your trying to find summer feed? winter feed? are you lookign for a custom lot?

[cowman]

I don't think Canfaxes numbers takes into account the cows going for slaughter in the US. Or the younger cows that might catch a grade. Also 1996 was at the very bottom of the cattle cycle. Anyone who fed cattle the winter of 95-96 took a severe beating. I know I did, I lost 70K at least on paper.
Now consider "added value". I moved up the value chain by feeding 50 steers last winter. I figure I probably lost about $100/hd. I guess I must just be a poor manager? Sort of like Cor Van Ray and every other feedlot in western Canada? Just sometimes you get caught in these wrecks and hindsight is always 20/20. Only God knows what the weather is going to do. You roll the dice and take your chances. It really has nothing to do with management.
I personally am liquidating 100%, mostly for health reasons. Next year mares and colts at $37.50/month.

[rodbradshaw]

It sounds like cow/calf pairs are starting to move into the auction marts in greater numbers. We have recieved about an inch of rain today, the first measurable rain in 19 days. It will stop the deterioration but we will need more in the next week. Herds will definitely be culled much more than in past years. The other side of the coin is that feedlots in Central Alberta are going to be struggling to find enough silage to feed the numbers that they have in the past. Thus less competition for calves and probably a much lower price than last year.
Hog price 4-5 months out are not that good either so it will remain to be seen what kind of supply of meat we are going to see.

[cowman]

The cattle cycle has sort of had a wrench thrown into it by these dry conditions. The crash should have been about 3 years off but is happening now instead. There was some "expert" quoted in the Western Producer as saying about $1.20 was the best you could hope for this fall for a 600 lb. steer and that the price would fall the lighter the calf! He further stated that this was a desirable thing after the"outrageous and excessive"(his exact words) prices of last year! It certainly is nice we have "experts" to set us straight on these matters. I am sure he will be totally outraged that those idiot farmers don't see the wisdom of paying out $600 this winter to feed a cow. I mean after all at $1.20 they are going to get $720! Those damned ungrateful peasants. Maybe he needs to get out his check book and get in the cow business. Show us all how it's done? Take up some of those "outrageous" profits?

[rodbradshaw]

Hind site is a wonderful thing when you are an expert. The feedlots where all forecast to loss 50-100 dollars /head in 2000-2001 and they actually made a good profit so they got a little cocky and bid up the calves last fall. Where was the expert then telling them that they were headed for a wreck? It sound s as thought there are a lot of cow calf pairs going to market this week and I don't know where they are going to end up.

[wilagro]

Maybe these 'experts' could advise me on how to cope with no rain, no grass and no reserve feed supply. Without a paycheck, I doubt that these 'experts' would last very long in the real world. I wish that I had kept a bit more of that 'outrageous' profit that I made on my calves this spring. After all, the fuel suppliers, utility companies, government tax departments and grocery stores didn't need it as much as I need it now.

[cowman]

They were advertizing they had a thousand pairs listed for Stettler yesterday. Now I'm not sure if southern buyers are back in the mix or not but I hear stories of cows going to Northern B.C. I also heard that IBP has cut back on their steer slaughter to handle the heavy volume of cows.
An employee of my local mart says the real "flood" is about three weeks away if we don't have some signifigant rain. They are not happy campers as they fear it could become a stampede and buyers won't be able to find a home for all the cattle. Definitely lower prices are on the way. If not in a couple of weeks at least in the fall as reality hits! The reality it costs more to feed the cow for one winter than she is worth.
Now we got a wee rain since I talked to him and I don't know if it was very widespread. But 29 degrees today, 33 tommorrow and 29 again on friday...that's the forcast this morning. It does not look all that positive.

[dalek]

There's some talk now in Ontario about looking west to buy cows, since we're continually in a calf deficit here bringing in western calves. Some of the cattle breeding co-ops that are starting up are thinking pretty hard about buying western cows now when they're cheap so that we can bring fewer calves in down the road.