Western Feedlots

[smcgrath76]

Interesting press release from Western today. With capacity of 100,000 head, their shareholders have opted to clean out the cattle that are in their yard and suspend all cattle feeding activities. They will continue with farming activities but are not feeding cattle. This is a big development. With nearly all of their cattle contracted through Cargill HR it will be interesting to see what happens both up and down the chain as we go forward.

[grassfarmer]

Guess its a sign of the times with reduced cattle numbers combined with lots of red ink feeding cattle these last turns. Presumably there will still be plenty bunk space left in western Canada?

[15444]

Won't be the last. The few local guys that still background cattle to yearling are still holding onto their yearlings. They have never held them this late. No one is even making offers on them and they know a big hurt is coming when they sell them.

[perfecho]

This may be our year to retain everything that isn't a keeper and feed the $3.00 barley and hope the local market keeps growing.....

[kato]

It was bound to happen. Volatility like we've seen lately is bound to do damage. At least they gave some notice so others have the opportunity to step in. If the market started to turn around in a reasonable amount of time, it could happen.

That being said, personally I think it wouldn't be a bad thing if a hundred smaller feedlots each putting 1000 head a year through were to replace one huge lot. I'm old enough to remember when that was the norm. Spread the risk, spread the money spent on inputs across multiple areas, and benefit many more areas with economic activity.

The important thing is that someone steps in to replace them.

[grassfarmer]

The important thing is that someone steps in to replace them.

Why if the cattle #s aren't there? They had 7% of the AB/SK bunk space but the national herd has shrunk 25% from it's max.

[WiltonRanch]

Why if the cattle #s aren't there? They had 7% of the AB/SK bunk space but the national herd has shrunk 25% from it's max.

True grass. I fear though this is a start to further closures. There certainly less cows kicking around. I just fear less feedlots means less guys making orders with order buyers or bidding on the electronic sales. Less buyers means less competition. Less guys buying feed barley. Sure it's all a symptom of a contracting herd but it also shrinks the demand. Not everyone is going to hawk beef out of the back of their station wagon or set up a table at the farmers market. Great concept by the way for somebody who wants to do the work but it isn't going to move 3 million calves. Where it could go and I've said this before but all the old guys quit and less young guys willing to take up the slack. The herd contracts to the point jbs and cargil start slowing the chain but then start bringing in U.S. Calves until that's uneconomical and then they shutter the plants and everything goes south and our beef comes from the U.S.

[grassfarmer]

Sure its a buyer less and that is never a positive thing but there are still plenty other feedlot buyers - things don't get real concentrated until the next rung in the ladder lol.
Way worse scenario, and always a possibility with declining herd size here, is that one of the two packers closes their door. Then you are faced with exporting feeders or fats across the border to maintain any semblance of competition and that's not a good position to be in.

[kato]

Perhaps Cargill will just buy it.

Discuss......

[perfecho]

As I posted over on commodity...Cargill does own the packing too, so if one doesn't make money, the other likely will. But, how big do we need our purchasers....think we have too few processors already.

[grassfarmer]

Perhaps Cargill will just buy it.

Discuss......

If they could make more money owning it they already would. IMO the fact that they don't need to speaks volumes about the captive supply power they have over the feedlot sector.

[burnt]

[URL="http://www.calgarysun.com/2016/09/22/feedlot-closures-last-straw-for-ndp"]http://www.calgarysun.com/2016/09/22/feedlot-closures-last-straw-for-ndp[/URL]

[grassfarmer]

[URL="http://www.calgarysun.com/2016/09/22/feedlot-closures-last-straw-for-ndp"]http://www.calgarysun.com/2016/09/22/feedlot-closures-last-straw-for-ndp[/URL]

Looks like a cheap attempt by the WR to make some political capital. Western Feedlots took a beating feeding cattle, as did many others in the feedlot sector over the last 14 months. Carbon tax didn't cause it - it doesn't come in until January 1st next year and agriculture is exempted anyway from what I've read. If Western are truly thinking it is an unviable business environment under the NDP why plan to continue to farm the land? Why not sell out ahead of the curve if things are so bad or going to get so bad?

[WiltonRanch]

Looks like a cheap attempt by the WR to make some political capital. Western Feedlots took a beating feeding cattle, as did many others in the feedlot sector over the last 14 months. Carbon tax didn't cause it - it doesn't come in until January 1st next year and agriculture is exempted anyway from what I've read. If Western are truly thinking it is an unviable business environment under the NDP why plan to continue to farm the land? Why not sell out ahead of the curve if things are so bad or going to get so bad?

Think the general mood in Alberta is the economy is the shits and the NDP is doing nothing to help but put loony regs in that isn't helping. Wether it's the oil patch, ag, or retail the NDP has done something to piss off the economic drivers. Guys are saying screw it lets idle things or shut em down until the climate is less hostile. Its every tree huggers' and lefties wet dream to see someone doing better than them suffer. Sad jealous people.

[perfecho]

Spoke to a fellow who was quite involved with western...says the writing was on the wall for a couple of years. Some of the stories he told, I can see why they would dislike bill 6....but why they needed it.
Find the biggest complainers in this down turn, are the ones who had it a little too easy to make money...they are now finding out how the rest of us lived. But, its always someone else's fault.