Price of calves need to double!

[littledoggie]

I look at that as the opportunity they have been looking for to bring back COOL.
The US Government already provides lots of support to the American Producer.[ATTACH]9524[/ATTACH]

Yes, some of the same characters involved as with RCALF. The US has a longer way to go to get to complete vertical integration. I don't think they even have mandatory RFIDs (or whatever technology). Canada is much, much closer. I was told by a top bureaucrat in Ottawa back in early BSE that vertical integration was the goal.

[The Don]

Came in from feeding this morning. -30 C with the wind felt like -40C.
Just thinking that for every 50 cows the money you lose daily would pay for your stay in a place like this... The hardship is you would have to pay for drinks...

[blueversi]

Most areas of North America have been priced out of cattle production. Guys lied to themselves as to the viability of their operations by using off-farm income to subsidize the on-farm loss. That practice caught up to a lot of guys this year.

It will be worse next year for guys that have a big bank note and only 1/2 the cows to pay for it. Is wifey going to be as understanding when hubby says they have to tighten their belt to pay the farm loan?

There is a big exodus coming. Hoping it's just the older guys and not all the young ones, but the old guys are dropping dead and the young ones are flirting with bankruptcy.

If there’s another big exodus who will be left? In our part of our RM it was probably 90 percent cattle farms, not big operations 50-150 head maybe. Off the top of my head there were 15 separate producers before BSE, then gradually they began to sell off and find something else to do. Right now there’s 2 producers left. Every acre that can grow grain or canola has been converted over. Cattle industry has been toast for quite a few years here.

[The Don]

Carson Callum GM of Manitoba Beef Producers is optimistic for the beef sector according to the last Cattle Country paper I got. I don't see any factual evidence to support this optimism. Feeder cattle October 22 futures price 188.125 I think the 2021 price was around $156.00 That $30 is going for feed increases to the backgrounder. There will be no cash "trickle down" for the cow calf producers. If you fought the good fight and hung on to your cows and some calves the future price doesn't reflect the added costs you are carrying.
The big dollars of cattle support dollars coming from the Federal and Provincial Governments is slow in coming. They have expanded the list of things they will pay for now. Why they didn't just pay it out based on the number of cattle you own is beyond me. I think the cost to administer the program is exceeding the pay out at this time so they had to sweeten the pot.
There has been a steady drop in the number of producers in my neighborhood also. Looking back to 2014-15 the price jumped up (briefly) but if you bought in and expanded in 2016 you got caught. Paying then current prices for breeding stock cost you dearly and there was no money to pay for those animals going forward. The "cattle cycle" is not working. In the US government money has supported the cattle sector. In Canada there has been no such support that's one reason why the Canadian Beef sector has shrunk so much. Selling cattle in 2021 for the same price as in 1990 is not encouraging growth in the industry and it shouldn't. If you can produce a half a cereal crop and sell it you will make way more than feeding that to those cattle.
They are already starting to beat the drum to get fresh blood into the business. When they publish the Cost of Production information they are way out to lunch. When you compare a producer that started in 1960 to that person you want to buy your operation in 2022 it's not going to work. They like to throw a bunch of numbers around using the B to the power of three principle. Bullshit Baffles Brains. I have never been able to make Manitoba Agriculture numbers make sense. They have shown a negative margin for the last number of years but they have understated the actual losses.
Manitoba Beef Producers management keeps saying there are 6300 producers. If you look at the 2016 census data and do some basic math the current number is around 2400 or so (my opinion). That's why the countryside is staring to look real empty of cattle. I can't see the benefit of inflating the producer number.
I keep waiting for reality to rear its ugly head and someone in a position of authority see the light.
I'm not holding my breath.
My cattle numbers have dropped in half this year and they will all be gone next year. I'm not interested in reliving 2016.

[The Don]

I thought I should back up the cattle producer number. This is a screen shot from Stats Canada.


Following this trend / pattern the 2400 number should be revised downward substantially.

[15444]

Fuel, fertilizer, drought, equipment prices and rising interest rates for overleveraged producers are going to be the perfect storm in 2022.

Be a lot of ag producers of all kinds exiting in the next year, not just cattle guys. Unless of course grain prices maintain and cattle increase 50% by fall. Even 50% might not be enough for some guys.

[GDR]

Does anyone actually care besides those of us in the business? Sad, but I think that's reality, if the beef heard mostly disappeared in Canada what difference would it make. Government doesn't make much for tax dollars and helps solve the environmental wackos issues. Average consumer is happy with cheap Brazilian burgers at walmart, less people every day willing to buy an expensive steak. Only hit I can see is the lack of feed grains that would be needed would be hard on grain prices but not too many straight grain guys seem to understand that.

[The Don]

Fuel, fertilizer, drought, equipment prices and rising interest rates for overleveraged producers are going to be the perfect storm in 2022.

Be a lot of ag producers of all kinds exiting in the next year, not just cattle guys. Unless of course grain prices maintain and cattle increase 50% by fall. Even 50% might not be enough for some guys.

I'm going for a full double in price. I think COP this year will be a big step up.
Grain prices are already locked in for this year. Cattle futures prices are in also. The drought is already affecting the central states Oklahoma , Kansas and the rest. We will have an issue with runoff this spring (flooding) and a drought this summer.
Interest rates are set to rise. The Cattle Industry in Canada has been drinking their own Kool-Aid and believe their own numbers. So it's going to be a surprise for them.
What to do? De-populate to a core herd and wait this out? Will future prices offset the money you put in now?
What are your thoughts on how to survive?

[The Don]

Watching todays blizzard I'm trapped inside for a while .
In order for this to be sustainable there needs to be a pricing system that recognizes the real cost of producing a live healthy calf. The cow calf producer cannot support the entire industry.
Backgrounders and feeders take the increased cost of grains from the cow-calf producer. Double hit for the cow calf producer who is paying those same increased costs to sustain the productive herd and then suffering the drop in income. You would think the industry would recognize this and take steps to ensure the cow calf sector is taken care of. The current zero sum process of cow calf sector loses and all others can prosper won't last.
It appears that the cow herd needs to drop in size more than what the drought is forcing.
There is already a big difference in numbers that are currently in use by the Government and the Beef Industry Organizations. What are the real / actual producer and cattle quantities? The real numbers are what will count going forward
The backgrounder and feeder sectors will be challenged trying to under pay for calves that don't exist.

[15444]

I'm going for a full double in price. I think COP this year will be a big step up.
Grain prices are already locked in for this year. Cattle futures prices are in also. The drought is already affecting the central states Oklahoma , Kansas and the rest. We will have an issue with runoff this spring (flooding) and a drought this summer.
Interest rates are set to rise. The Cattle Industry in Canada has been drinking their own Kool-Aid and believe their own numbers. So it's going to be a surprise for them.
What to do? De-populate to a core herd and wait this out? Will future prices offset the money you put in now?
What are your thoughts on how to survive?

Staying out of debt, or getting out of debt as soon as possible should be at the top of every beef producer's mind. Keeping costs as low as possible and building equity while riding the next price curve upwards, might give guys a chance to survive long-term.

I know of a few new local people itching to get into cattle or expand after this past year. Personally I think their dreams are bigger than their bank accounts.

This winter, multiple cattle guys are losing rented pastures and fields to crop guys upping the rent. Also, you are seeing guys playing it too tight on the feed supply and shipping backgrounded calves earlier than expected to save hay for the cows. My calculations say at the current prices, those guys fed calves up to this point for a considerable loss, considering what feed is worth.

In the US, buddy in MN told me this past week he is seeing a lot of 100-150 cow dispersals. Guys ran out of feed (or money). These aren't old guys, buy young guys that would have had another 30 years in the industry. US eliminated 1.3 milion beef cows in 2021 alone. Waiting the see what Canada's numbers will be like. I would be very surprised if at least 20% of the beef cows are not gone from this country.

I would have to check, but I think January 2021 Canada beef cow numbers were around 3.5 million. I think we could shave at least 500,000 off that number and we might see something that resembles a respectable and profitable price.

[shtferbrains]

IMHO the problem is the beef cycle has been going into the high end of the price but the packers are able to keep all the increase.
Some advantage will swing to the producer as market ready supplies of live cattle fall but packers seem to be happy to run lower volume at much higher margin as there is little actual competion in the beef to retail supply.

A roast beef at Costco is $70 and burger meat is $5.50 on feature.

They are happy running the plants at lower volume.

Don't rock the boat?

[The Don]

Even if you have everything paid for the prices you are getting won't pay for repairs ,maintenance, depreciation, labour and a return on the investment. Current feed situation here requires bringing money to the operation. Is hanging on worth the investment or is it good money after bad? I've already downsized a bunch. Can't afford to lose more.
Guys who want to jump into the market are not using realistic numbers for their cash flow projections. They may have been drinking the Kool-aid. Current prices and the future prices into 2023 won't support
maintaining the herd not thinking of expansion. That's my opinion (without a long discussion of how every producer has a different COP).
The packers are not running slow they import subsidized cattle from the US. Last year they imported 300,000 cattle into Alberta feed lots. That's the numbers that the USDA had posted. I think that was close to all the calves and cows coming out of Manitoba (330,000). Cattle marketed at a discount because the feedlots were full and there was a "backlog" to get into the plants.
Manitoba Agriculture think a 2022 price for 8 weight steers @ $200 / hundred weight is wonderful money. But it's costing the cow calf guy $1600 to produce a 5 weight calf.
There needs to be a change in the Canadian market where the industry recognizes the real cost to produce a calf in Canada.