How' the fall run doing?

[smcgrath76]

My personal belief is that the cattle cycle is alive and well (although slightly messed up by BSE).
Combine the cycle with the high $ and it does not look so good. Generally speaking it takes longer for input costs to drop as the dollar rises, versus the speed with which calf prices decline.
I also believe that over the long haul, our low dollar killed us in terms of being leading edge and competitive with our facilities, etc.
Our low $ relative to the US, led to high prices, which compensated for the declining infrastructure amongst our processing industry. Now that the dollar is higher, we really need leading edge efficiency in processing.
The discussion on who owns the processing is another topic altogether.

[grassfarmer]

Cowman, you say "I would suggest calves at $1.06 really is getting borderline to any kind of profit?" - really? and do you know my production costs? - do you know your own for that matter?
Personally I'm quite happy selling my off sort heifers at over $600 straight off their mothers. Their mothers cost $100 of purchased feed to overwinter last year and that was by far my biggest cost. That said these would be my lowest margin cattle, the main group that get sold after preconditioning and backgrounding will be my next lowest margin leaving my grassfed steers direct marketed as my highest margin cattle by a long way.
They are averaging $1390 a head after paying processing fees and beef delivery charges. Sold a year after weaning they work back to $1000 per calf at weaning even if you allow a $ a day feed cost for their second year.

There are so many opportunities in this country if people would just see them. You say "How many industries in the real world can afford to take prices we were getting in the 1980's?" - I would say how many of the coffee shop pontificators are bitching but haven't reviewed their production or marketing policies since the 1980s?

[cswilson]

GrassFarmer u crazy old coot don't you know were all gong to hell in a hand basket-I'm glad I can't charge rope at the Co-op or I might just take the plunge lol. Cows do great on grass and water not so well on whine and ponder. We made a bit of money on our fat cattle this summer and I suppose we'll make a bit on the next set.

[Cattleman]

kpb and smcgrath, I am on the other side of the cattle cycle arguement. For argument sake, do you believe the North American cattle industry operates on the same cycle? My understand from teh cattle cycle theorists is does? Then if so, isn't the American herd in rebuilding phase? Or is it done already? Also, it sounds like Canada is in the liquidation phase??
Maybe I have some of this wrong, but it appears to me that once something happens in the industry that resembles part of the cycle, we jump to say the cylce is working, such as a shift in calf prices.
In the theory of the cattle cycle production drives prices, and we react to these prices in our production decisions, but right now, grain is driving cattle prices, and this along with drought is driving production decisions. None of which relate to the cattle cycle theory.
To me it seems that trade uncertainty, weather uncertainty, price uncertainty, and demographics of agricultural producers is driving production decisions.
I would like to hear your thoughts, I think there are a couple holes to punch through! Thanks.

[kpb]

cattleman, all of the variables that you mentioned along with others such as currency movements will affect the short-term cattle prices. But the cattle cycle being 10 to 12 years long can be used to help predict the longer term movement of prices.

Also, it does not matter what the Canadian cattle herd is doing, expanding, shrinking or staying the same. Prices for fats are set in the U.S.,like it or not and the size of our herd has no bearing on prices. It may be hard to swallow but our prices are established by the U.S. market--there really is no such thing as a North American price--there is a U.S. price that is reflected, with the basis, in Canada.

I am always amazed at people who think that all commodities, including cattle, are not cyclical. This is not really mysterious-when prices are high commodity producers (cow-calf guys) expand their production to take advantage of the high prices. This, in turn, leads to more product, more supply to meet a limited demand and, therefore, prices decline. This forces producers to cut back, hence less production to meet demand, therefore higher prices. Therefore a cycle.

At the moment U.S. cattle producers are expanding to realize higher prices. This will result in more calves coming to market, hence more product and lower prices in the future as I stated in my previous post. It matters not at all what Canadian producers are doing in terms of liquidating or expanding their herds. Except that if you expand when the U.S. guys are expanding, you are going to be stuck with more calves when the prices slide.

The old saying is that no heifer calf kept to be bred when prices are high has been a profitable cow. Mainly because that heifer's calves are hitting the down side of the market. The best time to buy or keep heifers for breeding is when they are selling for .70 a pound and nobody wants them. Then that heifer's calves will hit the rising market.


kpb

[blackjack]

...i think kbp you should write in the cattleman's magazine...great insight...

[cswilson]

Don't you know that the U'S market will teeter at the brink and collapse if we send one too many potloads of calves there. I'm surprised old Willowcreek hasn't been on this board too expounding his R-Calf theory of economics. The cattle business sure is cyclical it's not too scientific but the old adage 'If your cryin' you shoul'd be buyin' works most time. Mind you there's a few posters o here have a tear in their eye 24/7-not sure what the solution for them is-we can't use them over here in Saskatchewan lol.

[canuck]

Willowcreep is probably down south building Georges new fenceline.No doubt good practice for the one he wants to build along the Canadian border.

[cowman]

Grassfarmer: I don't know your production costs but I like to think I have a fairly good grasp on my own costs? Some times it gets a little muddy because I'm running two different enterprizes here and the oil service business ends up paying a lot of the bills!
In my area grazing costs about $1 day. That is what it is worth. I graze close to 200 days a year on average...So $200? Feeding in winter about a dollar a day including fuel for tractor, repairs etc. So overall $365 a year for feed per cow?
Now that 2 year old heifer costs me $1200 and ten years later she brings me $700...so $50 a year depreciation?
My $1200 heifer investment costs me what per year? Borrowed or my own money has to be around 7% or $84?
I have always been adverse to working for nothing? So maybe I need a bit of return for my labor? I put that at $75 per cow?
And unfortunately cows don't get pregnant by immaculate conception so breeding costs at $30?
Basically here it is:
Feed(winter and summer) $365.00
Breeding $ 30.00
Cow depreciation $ 50.00
investment interest $ 84.00
salt and mineral $ 7.00
vet costs(inc. RFID tag) $ 10.00
fence & corral repair $ 10.00
labor $ 75.00
utilities $ 5.00
sales costs $ 20.00
trucking $ 10.00
land taxes $ 5.00
Office expenses $ 5.00
death loss 3% $ 20.00

TOTAL $716.00

I did not add in the cost of a truck/quad/whatever to run around in checking cows but did consider the time in my labor costs.
I guess my costs are a lot higher than most or something? I try to be realistic in what things actually cost me?

[whiteface]

Bang on Cowman. And then if the calf prices are at or near a dollar a pound we sure better be getting these calves at 800 lbs plus at weaning. How much damage are we doing to these cows asking that much of them year after year...and many of us demand these kinds of weights on just grass and from tiny cows that are not really genetically programmed to put out that much calf, just made to milk harder, milk harder but still put out decent muscle expression. No wonder some come in open, they just get exhausted putting out that much calf year in year out just to try and be let past the cull gate.
Not trying to convince anyone that mine are perfect...
far from it, in fact, I usually tell people mine are all pets that I just enjoy looking at and haveing a reason to get up in the morning that I actually enjoy. My grandpa used to say that and I never really understood it until now. Pretty tough for a cow to be anything other than a pet around here but admittedly I managed to make some pretty darn good and efficient cows in my hope of makeing them "profitable" for this area. There's a challenge all by itself.
And land just keeps going up, and taxes just keep going up. Gas is down for a while but that will be short lived. Cows can't keep up and really no point in asking them to try. Have a good day all!