Not too bad

[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.

[BFW]

Have you noticed the large amount of heavy yearlings (steers and heifers weighing 1000 pounds plus) coming off of grass) recently? That's where last years calves went, to grass!

[cowman]

You are definitely right BFW and I suspect there are a lot of them still out there. You still can see a lot of big yearlings out and about in the country.
A lot of people took a chance last year and kept their calves...and got burned big time! I don't think it was a bad decision...it was just the Washington cow that threw a monkey wrench into the scheme! So you roll the dice and you take your chances.
I would suspect cattle feeding this winter might make some sense? Feed is cheap and abundant, calves are cheap and abundant? The chances of the border opening to bone in beef look good in the New Year. There are a lot of positive things happening right now that indicate we may just get this industry turned around.

[BFW]

Farmers Son in this environment there is really no way to quantify the risks associated with buying cattle to put on feed so to say thay feedlots are pencilling in a healthy margin for risk is somewhat misleading. Right now the only tool available is to secure a contract with one of the packers and those are few and between and tend to work lower once they have enough done in any one delivery period. There are many factors driving the market to where it is now those being year end income deferral for tax management, packers buying cattle, Americans(and Canadians)speculating on a border opening. My point is there are many factors that go into determining prices and I think that to say that feeders pencilling in wider risk premiums is a very small part of the equation. No one is bigger than the market and it will go where it will higher or lower. As for the profits on the cattle placed in February/March there were lot more cattle that lost money than made, as there were not many feeder cattle sold at those low prices that everyone remembers. We will all get through this situation a lot healthier if we make decisions based on what is good for our own families and businesses and forget about the "what ifs", do what it takes to survive. Sorry for rambling.