Market giveth market taketh

[blackjack]

When one thinks the market was to good be true...

[burnt]

We will be seeing these prices for at least 2-3 more years! they said...

[15444]

They can easily drop another $200 on the calves before I'll be too worried. I was quite happy with $800 calves and overjoyed with $1200 ones. Lots of high-cost producers out there that only became higher cost with these prices.

[blackjack]

So true Burnt...saw some consignments this past week that makes one wonder if there are some wrecks already starting.

[grassfarmer]

In agreement with 15444 for once! Looking at Calgary Stockyards prices this week for a 550lb steer/heifer average would be $1306. At the bottom of the seasonal cycle that's still pretty impressive money to me.

[blackjack]

Just curious who are the high cost producers ?

[WiltonRanch]

A guy knew damn well when U.S. Prices were starting to dive this summer it was coming here. The cattle cycle is just at play. I wouldn't doubt we see bottom for a couple years. However prices will trend down to this point. Watch the dispersals coming up in time cause if it's like anything else more stuff is sold when prices are going down instead of up. Grass guys if they bought early this fall may be feeling a bit uneasy. If next fall prices keep eroding it may not be pretty.

[blackjack]

Thats why I find it fastinating those producers buying high priced breds for example wiltonranch. When that is one of few management decisions we control as a cow-calf producer.Last time I checked we sell a commodity with margins that are out of our control.

[15444]

Blackjack,

The 200 cow/calf guy that runs 12 different late-model tractors because he doesn't like switching implements.

The backgrounder who buys almost every piece of ground that comes up, runs a full fleet of very nice, late model equipment and only backgrounds 300 head at maximum and sometimes less than 200.

[grassfarmer]

There was an interesting document doing the rounds out of North Dakota recently. It shows that the price per pound to raise a calf had roughly doubled since 2000. Often ranchers are their own worst enemies when it comes to controlling costs.

http://www.canadiancattlemen.ca/2015/11/09/north-dakota-beef-production-costs-jump-200-per-cent/

[blackjack]

All of us have been through the bse years so I don't think we'll forget what we had to do...but was it not fun this past year to feel at least somewhat rewarded for the past.

[perfecho]

If the Canadian $ starts going up, that will be a major effect...although that doesn't seem to be in the short term....

[WiltonRanch]

Think the higher end breeder market will take at bit longer to deflate but it will happen. $4000 heifers may work on $1500 steers if it stays but you know full well that won't happen. Mark my words we'll see $800 steers again and guys will take it on the chin as usual. When cows were cheap guys really watched their expenses but I bet some have got a little lax lately. I know I'm sure sharpening my pencil again to see what a guy can do more efficient and cost effective. One thing we have done last couple years is keep a lot more of our own replacements and buy opens rather than breds. I know some say breds are a better proposition but the cash outlay is crazy these days. As well we have culled the crap out of our herd the last 8 years and tried to buy some bull pedigrees that are noted for good females. My goal in a perfect world is to only have to buy Bulls and nothing more.

[kato]

We never unsharpened the pencils. Lol

I guess that's one legacy bse has left, at least for those who survived it. We did however use the good times to pay down debt and replace some equipment that was pretty much being held together with twine, recycled parts, and luck.

Those high prices also spooked us right out of the backgrounding business. We've gotten the cow herd looking pretty young now, and gotten back some numbers that went down over the past five years, so now we're as ready as we can be for reality. I think a lot of producers have done much the same thing as we have.

After what we all went through since 2003, a so called normal cattle cycle should be quite manageable. At least we know that if and when prices drop, they will come back.

[WiltonRanch]

Exactly Kato. I am more worried about drought and not producing enough economical feed. We are price takers and the only control we have is our cost of production and minimizing death loss. Between the 2002 drought and the following bse debacle it has made me and many others cautious and somewhat cynical. How can you forget backgrounding all your 2003 calf only to get less money than if you sold in the fall. The next couple years we did the same thing and made out not bad but when margins are thin absorbing that much of a loss is brutal. Last year or two we for the most part took ourselves out of the bred heifer market because it is the wrong time in the cycle and prices aren't sustainable long term. Besides when $3500 bulls are trading for $5000 you know it is becoming inflated. Good for guys selling all around myself included but it's more money outlay and a larger exposure to risk. I seen so many in 2002 borrow hundreds of thousands to get their cows through only to lose it all with the bse fiasco. I won't expose myself like that. That would be bad as grain farming and look at the scale needed there to justify a living.