Not too bad

[15444]

Well, didn't do as bad as I thought I would do. 1400 head up for sale at the local sales barn yesterday. High of the sale was $1.16 on 20 Charolais steers @ 540 lbs each. Basically all steers between 300-600 lbs in the .80-1.00 range. Heifers, same weights, in the .60-.80 range. No big buyers for 6 weight calves, so they went cheaper then they should have, alot in the high 60's, low 70's for GOOD calves.

Averaged about .85 on our 4-5 weight steers and .65 on the heifers. Good heifers in 6 weights got really discounted, down to as low as .50

Lots of buyers from in and out of province (NW Ontario) as well as local. Few local guys took home 100 or more calves each.

[pandiana]

How much did the $200.00 set-aside influence was the good price for those younger calves?

[grassfarmer]

Ouch!! - still painfull. I know I couldn't afford to keep cows at these prices and I consider myself a lower cost producer. Glad to see you still smiling though.

[15444]

Nobody is counting on that set-aside program to come through. Basically everyone figures that the government will hold off paying out till sometime in January and then the border will open and they will keep the cash. A lot of guys just sold every single calf, heifer or steer. Alot are scared shitless as too what the price might be if the border is still closed then.

A few guys bought some old cows, bred and culls, that they are going to breed and get another calf or two off of. Herd dispersal of 15 Simm/Char/R Angus cows w/ fall calves and 1 3yr. Red Angus bull went through the ring at lunch. Pairs went for 500-800. Bull went for 300? I think.

No grassfarmer, I don't like the prices and wish they were a little more decent. But I think we did ok with all the uncertainty in the industry right now. Doesn't look like the government is going to put any money into these producer-driven packing plants and producers won't invest unless the have 100% guarantee that it is a go to happen.

[grassfarmer]

I might be out to lunch on this one but I believe there is a better case for producers retaining calves this fall than there was last year. In the west there is abundant, cheaper feed and the prices offered at auction are significantly lower than last fall. Fat prices have been poor this summer but still higher than last years fiasco. Add to that the potential of getting $200 on 40% of your calf crop. This is all without considering the border opening issue - I'm not relying on it oppening any time soon. I may be wildly wrong, time will tell, but this year I am keeping as many of mine as possible.
Seems to me there is a feeling among calf sellers that things are not as bad as they were speculating they might be a couple of months ago - but are current prices good enough? or are sellers being conned out of good calves at low prices by buyers talking down the market all summer then raising their bids just enough to get people to sell?
I note Canfax yesterday showed the 3 year average (2000-2002) for 550lb steers as being $1.48/lb. That's quite a drop we've taken.

[cowman]

I agree with you grassfarmer....however that is a tough decision to make when the banker is knocking at the door!
I suspect 15444 might just be right about the $200 dollar thing being a pipedream? After all the scheme states"Void if the border opens to BONE IN MEAT"? I suspect that will happen in the new year, especially when Bush gets back in? So perhaps all our efforts to get the government money will be in vain?
I also suspect some people are getting pretty near the edge and need to generate some cash? Pie in the sky is nice but if you need that dollar today, then what are you going to do?
Remember I talked about deep pockets and who will survive?

[15444]

One thing about the set-aside program. If you buy the tags and then report the tags on the set-aside form without tagging the calves, how is anyone going to know whether you kept the calves or not?

Sure, inspectors will check some places, but they can't check them all! Buy the tags, ship the calves and report the calves as tagged.

If someone comes along to check...oh well, didn't get the $200 bucks, but sold the calves at a half decent price and don't have to worry about feeding extra head this fall!

[15444]

One thing about the set-aside program. If you buy the tags and then report the tags on the set-aside form without tagging the calves, how is anyone going to know whether you kept the calves or not?

Sure, inspectors will check some places, but they can't check them all! Buy the tags, ship the calves and report the calves as tagged.

If someone comes along to check...oh well, didn't get the $200 bucks, but sold the calves at a half decent price and don't have to worry about feeding extra head this fall!

[grassfarmer]

Yeah, might work but then again the people checking might get smart. Once you get a bit of money involved the rules get pretty tight. I got stung in Scotland with a similar scheme - a 4 month retention period starting when the animal was 17 months old. Got audited two years later and they discovered that I had sold two of the steers through the auction at 11am on the last day of the retention period which technically didn't end until 12pm that day. No matter that they weren't slaughtered until the next day - I lost the money on them and on all the other animals claimed at that time (only 5 or 6 luckily) I knew people who had to pay back the money on 40 or 50 head. The joys of farming Government!!

[farmers_son]

Some things about the market this fall compared to last fall. Western Barley Futures are trading around 120/tonne, last year 200/tonne. The Canadian dollar is around 79 cents, year ago 63 cents. U.S. Live Cattle future are at 85 cents, last year around 67 cents. Last October 7, 2003 5-600 pound steers brought 98-1.15 at our local market or about $100 less per head this year than last.. Prices should be $100 higher than 2003, not lower even forgetting about any government program or expected border opening. Last year we heard all about how the government handouts the feedlots got just got handed over to the cow calf guy in the fall calf sales. Maybe that happened, maybe it didn’t but I certainly don’t see any of the money the feedlot guys got reflected in the prices quoted this week. If the border were to open to live cattle the value of a fat calf would jump overnight by $350. That is serious coin if you have 50,000 in the lot.

The only thing I can think of why people would let their calves go this cheap and not at least keep back the heifers is CAIS. These producers must have high CAIS reference margins and just want to cash in and not be bothered changing their old ways of doing things. If they took the 200 bucks from the government it would just come off of their CAIS entitlement anyway. They must be just going to send in their CAIS Supplementary and run with the CAIS cheque to the bank. If it works for the cow calf guy I guess that is fine. Certainly is opening up some real good opportunities for the backgrounder and feedlot.

Grassfarmer, if you want to really get into government programs consider this. What if the government deems that producers got the $200 per head even if they choose not to participate just like they deem producers have received crop insurance even if they never took it. I wouldn’t rule it out.

[BFW]

If today's calf prices offer so much opportunity then why aren't feedlots falling all over themselves trying to buy them? Take a drive or hop in a plane and fly over Southern Alberta, lots of empty pens. Calves are lower this year for two main reasons. One, there is less optimism and speculation that the border will open before they are ready to market and two the equity lost from the feeding sector is having an impact on the total supply of money available in the system to purchase feeder cattle. Futures prices, exchange rates and feed prices are secondary at this point.

[blackjack]

bfw... I would have to agree that there is a lot of gun shy feeders and I suppose bankers... myself I bought a few calves last fall but maybe a third of normal(paid off the principal and about a third of my feeding costs)...remember some cowcalf operations that held off selling last fall did not fare well this past spring... the market does appear if you can put a pound gain on for 60 cents go ahead and keep them ... bfw... where do you think the price of fats will be spring of 2005...

[kato]

What we are seeing this fall is a really big spread between the good calves and the second cuts. A lot of that probably has to do with 'farmer buyers' who don't have the nerve, or cash to pick up the less than premium calves.

In Manitoba a lot of farmers will pick up the lighter calves in the fall, and try and hit the grass market with them. Those guys are not on the market..yet. Whether they show up remains to be seen.

I know we are really thinking twice about buying calves to background this fall. We bought some last fall, and ended up finishing them. We may concentrate our efforts on our own calves instead, and do a really good job of finishing them rather than take on the health problems and shaky prospects of auction mart calves.

So the moral is, if they are less than fancy, the price will not be there. I would recommend everyone go to a couple of sales and see in person what is going on there, and what is selling or not selling.

[BFW]

Blackjack, we are thinking that fed cattle prices here in Alberta will be in the high 70's to low 80's through until mid May and then drift lower from there though really nothing firm out there to support this thinking. Prices like this were available last year and current feeder prices work at these levels and may be the set aside program will help in supporting the market at prices similar to or higher than this.

[farmers_son]

Interesting comments. True the cow calf guys that held off selling last fall and sold February instead did not do good at all. But the feedlots that bought those calves and sold them September or later did great, $50 to $100 per head profit with the potential to do even better by keeping them to December on the latest government program. I see the feedlots are penciling in a very healthy margin for risk. If the cow calf guy is willing to retain ownership of his calves he gets to keep that risk margin plus $200 on 40%. Instead of using CAIS to justify not having to change the farms traditional way of marketing calves, maybe producers should be considering using CAIS to backstop the risk of keeping into 2005 and collecting the built in risk premiums themselves. But you have to keep them until they are fat. If you are just looking to keep them until February you are playing the border will open game and if it doesn’t you will end up selling them to those same feedlots again who will be more than glad to let you feed those calves for 4 months for free.

BFW I believe you when you say the feedlots have empty pens. Where are last falls calves? Some are on grass and some heifers were retained. None went south unless they were smuggled across the border hidden in truckloads of marijuana coming out of BC into Washington. The expected glut of calves that were supposed to be on the farm never happened last March and never really happened since.