Fact or rumour?

[pandiana]

I talked to a fellow yesterday, who talked to a fellow who was supposed to know someone in high places...who said that "that it had been announced that the border would be opened on September 1st". I heard an announcement along these lines but took it as another 'probable' or 'maybe'. This fellow, however, thought that it was official.
What are your thoughts?

[rodbradshaw]

Have heard that the border will open to boxed beef but live cattle may be a long time off. Hope this is not true or we will be held ransom for our calves and grain? Any comments?

[Muttley]

I think most of it is just wishfull thinking. I hope it opens soon but if you listen to most reports they are from undisclosed sources or from groups with no real say in the problem!!!

[cakadu]

I think what has fueled some of the rumors is that Americans were buying at the satellite sale held in Red Deer yesterday - August 1st. Some are believing that if the Americans are buying, then an open border cannot be too far behind.

Story I heard was that Van Clief said that the Japanese are willing to relax their stance on letting in Amercian beef, provided that the Americans can prove - read document - that NO Canadian beef is mixed in with what is shipped to them.

The powers that be are now trying to hammer out some sort of protocol that will allow for this to happen. Of course, this will all be subject to approval by the Japanese. The earliest this was to happen was by sometime in September.

How much of it is true, or speculation, or just plain wanting the border to re-open is anyone's guess at this stage. Boxed cuts will be one thing, but as Rod points out, without the border open to live cattle it still will fall short of what we need. Having said that though, at least it would be a start.

[rsomer]

pandiana: The fellow you talked to yesterday, who talked to a fellow who was supposed to know someone in high places...who said that "that it had been announced that the border would be opened on September 1st" would have been referring to a news story on CBC: http://edmonton.cbc.ca/regional/servlet/View?filename=ed_madcow20030731

rodbradshaw: Due to the urgency of the situation, whenever the border opens to live cattle it will seem like a long time. I have doubts we will be shipping boxed beef south by September 1. In my view it will take longer than that, late 2003 or early 2004. Yes, we are being held ransom but I don't believe the Americans want to kill their hostage, (the Canadian beef industry), rather they are holding out for a suitcase full of ransom goodies (change of leadership, competitive advantage for their beef industry, cooperation from Canada on Strategic Space Initiative, harmonization of marijuana laws, the list goes on...). The Americans will not squander the opportunity they presently have to get the Canadian government back in line with U.S. policy by opening the border too quickly or all at once. But they won't kill the hostage, although the hostage will be very uncomfortable for a period of time and will come out of this ordeal thinner and more afraid. Its fifteen months to the next U.S. presidential election, beef producers should look within that time frame for significant developments to occur at the 49th parallel. We would do well to watch the U.S. election polls in 2004.

[pandiana]

Yes! Boxed beef makes some sense. Some pressure from IBP and Cargill would certainly work in favor of opening boxed beef shipments.

[pandiana]

In consideration of the report from CattleFAx, excerpted from Cow/Calf Weekly, the following rosie outlook on the American cattle industry would probably dampen their enthusiasm for opening the border. It is difficult to assess how this will effect us in the long term. The longer the border stays closed, the harder it will be fore Canadian cattle to compete as the American cattlemen will quickly move to fill the void.
[The USDA cattle report released last week indicated little change in heifer retention rates but signs are beginning to show themselves. Cattle-Fax is beginning to see some heifers being redirected but, given the current cattle prices, he says it will be tough for many producers to hold heifers back. "But we think we will start seeing the building and restocking of the cow herd around the country in the next couple of years," Miller says.
The 2003 growing season's corn crop is shaping up to be record large. As a result, expect corn prices to be lower in the next 12 months than they have been in the past 18.
"Our industry has reacted to fill the void created by the situation in Canada. We have probably over harvested cattle -- relative to what we would have done otherwise -- the last eight weeks. And we'll likely continue to do that until there's a reopening of the border," Miller says.

He expects this year's slaughter figure to top last year's, and anticipates that the 2004-2005 period will be the cycle low for slaughter and should correspond with the likely high in fed cattle, feeder cattle and calf prices, as well. Cattle on feed numbers are likely to stay down until early in 2004 due to the recent aggressive marketing of fed cattle.


Right now, the U.S. beef industry is on pace to produce about 26.3 to 26.4 billion pounds of beef this year.
The first six months of 2003 are shaping up to be the best six months of beef demand in the past 20 years. Even with what he called "extremely high prices" at retail and wholesale, there's no indication that U.S. consumers are backing off of buying beef.
Through May, beef exports are up 3.5% and beef import totals are down about 1%. The export figure doesn't include the months of June or July, however, which will move that export percentage higher as a result of the ban on Canadian beef exports, Miller says.
With the market moving up $2-3 the past week, Miller says it appears that the low $70s will likely be the fed-cattle support level for the balance of the summer. "We're not going to lose much money, if any at all, during the summer months, Miller says. "Historically, it's so rare that this industry doesn't lose at least a little bit of money feeding cattle. As a result, 2003 is shaping up to be one of the most profitable cattle feeding years in the last 15, and maybe 20, years."
Miller says that "for the first time in a long time, the entire industry is doing quite well." Meanwhile, prices for feeder cattle are expected to reach the $90 level later this year, while the market for 550-lb. calves will continue strong, possibly reaching the high $90s this fall.
"From a price standpoint, our industry is in very good shape" Miller says. "If there's one thing we frankly wish wasn't going to happen over the course of the next few years is that beef supplies will decline at a time when consumers are demanding an awful lot of U.S. beef," he says.
-- Joe Roybal]

[ValueChainFX]

Both Cargill and IBP are US companies; both companies have their own cattle on feed and will use those to look after their firmly entrenched Canadian customers. When the boarder opens up we can expect to see boxed beef and swinging carcass beef moving across. Hopefully this will take some of the pressure off, but you can bet it won't be much the low prices will get us.

However, I do expect we will see some of our more progressive producers move toward establishing a more diversified customer base and start investigating a more stable and long term marketing strategy!

[pandiana]

Value-Chain
"However, I do expect we will see some of our more progressive producers move toward establishing a more diversified customer base and start investigating a more stable and long term marketing strategy! "
I would be interested in knowing what your 'strategy' would be and where you think a 'more stable and long term market might be'.

[ValueChainFX]

Although market strategies are something not everyone will agree to facts are facts. Looking at the imports into Canada and the market potential of what we are calling niche markets today I think it is obvious that if we do not look after the markets in our own back yards someone else will.

An example of this can been seen right here in Alberta. Ask yourself where does the beef come from in our retail stores in Alberta?

To answer this question understand first that all the major retail stores require Federally inspected product. So now you can take the entire provincially inspected product out of this mix.

Now who does your Federally inspected product come from? Canadian companies? American companies?

The fact is, the live animals may be Canadian beef, but our large packers work in markets that they can mass-produce for. The small markets (niche) markets are left for a value added company to work on or not depending if they can get the product for that market. Such as the Organic market, the natural market, small box programs, etc.

The markets outside our boarders are important, but when these markets keep our industry alive we have to wonder if the risk is worth it?

The interesting part about marketing is that if a market is of no interest to one person, it opens an opportunity for another.

I suggest simply this, we know we have to provide the things the export markets are asking for so we are either going to supply them or not go after that market. In the mean time, we best be sharpening up our pencils, and revisiting our strategies of letting others take our own Canadian markets from under our noses.