Western Feedlots

[WiltonRanch]

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.

Money was quite easy to come by. Young guys 19 or 20 years old with high paying jobs and all the toys and payments to match. Easy come easy go. I know and share some of your angst but those peckerheads also paid a lot of the tax dollars that you and I are going to have to cough up. When oil was good they left us in ag alone now they'll find more ways to extract money from us. Maybe the NDP will go after your "welfare Cowboys" if they have nothing to lose. God if we in Saskatchewan got the oil lease revenue on our lease land life would be easier. How and why did and does that still happen?

[Blaithin]

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.

I believe it's their High River feedlot that has done a lot of downsizing the last few years. Before the NDP got in for sure so that political article in the Sun is a bit off the mark IMO.

Also the Mossleigh lot did quite a bit of export into Washington although I couldn't say what percentage.

Plus the fact that feedlots are custom feeders and feed other people's cattle... well if the owners you have aren't buying cattle, custom feed someone else's. There's something going on there that the mainstream articles blaming it on Bill 6 and the Carbon Tax aren't mentioning. I can see if feed prices were through the roof and cattle prices in the tank then it would be a bigger issue but without that it's really the same old story.

[smcgrath76]

I believe it's their High River feedlot that has done a lot of downsizing the last few years. Before the NDP got in for sure so that political article in the Sun is a bit off the mark IMO.

Also the Mossleigh lot did quite a bit of export into Washington although I couldn't say what percentage.

Plus the fact that feedlots are custom feeders and feed other people's cattle... well if the owners you have aren't buying cattle, custom feed someone else's. There's something going on there that the mainstream articles blaming it on Bill 6 and the Carbon Tax aren't mentioning. I can see if feed prices were through the roof and cattle prices in the tank then it would be a bigger issue but without that it's really the same old story.

I had custom feeding well explained to me by someone I quite respect and why it is the worst feeding business in the world. Firstly, when there is money to be made everyone wants to custom feed and your lot capacity is filled. Upside potential is the markup on the feed and yardage. When there is money to be lost there are limited people wanting to feed, so in order to maintain your bunk space you wind up buying low or no margin cattle. Basically limiting your upside potential and ensuring the downside. Makes sense to me why a lot of folks are getting out of the custom feeding business.

[Blaithin]

I had custom feeding well explained to me by someone I quite respect and why it is the worst feeding business in the world. Firstly, when there is money to be made everyone wants to custom feed and your lot capacity is filled. Upside potential is the markup on the feed and yardage. When there is money to be lost there are limited people wanting to feed, so in order to maintain your bunk space you wind up buying low or no margin cattle. Basically limiting your upside potential and ensuring the downside. Makes sense to me why a lot of folks are getting out of the custom feeding business.

It does yeah. The big buyers who own the majority in the lots are going to sit back and wait until they can make money for sure.

However I see this as a good time for smaller guys to get back in. Cattle are low, feed is low, negotiate a rate accordingly for having them custom fed. Even if fats stay low, the profit margin isn't so negative as buying weaners at last years prices to sell at this years.

Of course the feeders are like contractors who bid out their rates. If they don't feel they can operate at current bidding rates then why not put everything into storage and wait for rates to come back up.

With weanlings averaging around $900 currently, fats estimated at $130 per hundred weight and that $2.80 feed barely it's a market to enter into if you're just starting. Not going to get rich but you'll get in the door.

[WiltonRanch]

It does yeah. The big buyers who own the majority in the lots are going to sit back and wait until they can make money for sure.

However I see this as a good time for smaller guys to get back in.
With weanlings averaging around $900 currently, fats estimated at $130 per hundred weight and that $2.80 feed barely it's a market to enter into if you're just starting. Not going to get rich but you'll get in the door.

Good point. It comes down to what you make per pound of gain. Cheap calves and a reasonable potential profit means less dollars out. High priced calves means more risk. I just wonder for my situation where I usually sell the majority of steers in November and keep over heifers and dink steers till February March. We haven't kept everything over for a number of years as there was no money in it. I need at least $0.85 per lb of gain to value add my grain and pay for yardage. I am cautious feeding into a down trend of the cycle but if some smaller guys can make it work then it may fill a void left by the feedlot closures. Back in the day barley was worth **** all unless it was malt and a lot of grain farmers finished their own calves or bought weaners to finish and add value to their grain. At least that was how it was here in NW sask. Now everyone grows wheat and canola and stuffed barley. I always thought it's quite something that we raise cattle, grow feed grains, and ship it all out to southern Alberta to be fed by someone else. Economy of scale and efficiency I guess. Something to be said for expertise.

[smcgrath76]

Good point. It comes down to what you make per pound of gain. Cheap calves and a reasonable potential profit means less dollars out. High priced calves means more risk. I just wonder for my situation where I usually sell the majority of steers in November and keep over heifers and dink steers till February March. We haven't kept everything over for a number of years as there was no money in it. I need at least $0.85 per lb of gain to value add my grain and pay for yardage. I am cautious feeding into a down trend of the cycle but if some smaller guys can make it work then it may fill a void left by the feedlot closures. Back in the day barley was worth **** all unless it was malt and a lot of grain farmers finished their own calves or bought weaners to finish and add value to their grain. At least that was how it was here in NW sask. Now everyone grows wheat and canola and stuffed barley. I always thought it's quite something that we raise cattle, grow feed grains, and ship it all out to southern Alberta to be fed by someone else. Economy of scale and efficiency I guess. Something to be said for expertise.

I also think feeding into this downtrend is very worrisome, barring some good hedging strategy. I certainly wouldn't venture it without some price protection. As far as filling a void, we are still way overbuilt on feedlot capacity given the current cow herd size in this country.

[WiltonRanch]

I also think feeding into this downtrend is very worrisome, barring some good hedging strategy. I certainly wouldn't venture it without some price protection. As far as filling a void, we are still way overbuilt on feedlot capacity given the current cow herd size in this country.

Yes overbuilt. It's a wonder us feeders don't come north or is cog better down there still?
Looking at current prices I still don't want to celebrate all my calves birthday here. Unless things change a bunch I think we will market the heavier end steers off the cow, cut out breeding quality heifers, and background the rest for 120 days or as long as I can keep my lunch. Markets are gonna be volatile.

[perfecho]

I could live with the downturn....if my expenses downturned as well.....but that ain't happening!

[grassfarmer]

Cattle feed must be down on the year surely? what 30%, 50% down? That's got to play into our strategies surely?

[perfecho]

Some feed is...however I was alluding more to Insurance, taxes, fuel....and especially fuel, being pillaged right now...about %30-40 more than it should be....but people whine about the carbon tax....