Price of calves need to double!

[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.

[bucket]

28 quarters of pasture listed around here for 5 million+

I can't pencil it out to make sense of something that struggled to adequately handle a 250 cow calf operation.

The guy just did a major reduction to keep the base herd. Now its going to be retirement.

[blackjack]

What percentage is lease land bucket….is there potential for grain farming….that is 5 to 6 quarters worth here in the Red Deer area.Land is a hot commodity makes no sense one would think production wise.

[The Don]

I don't know where that land is and what it's worth. The one thing I can say is that the cattle won't pay for that.

[shtferbrains]

What percentage is lease land bucket….is there potential for grain farming….that is 5 to 6 quarters worth here in the Red Deer area.Land is a hot commodity makes no sense one would think production wise.

Wouldn't 6 quarters at Red Deer run more than 250 cows?