Markets?

[grassfarmer]

I'm wondering if we are all being too pessamistic on this board today?
Read the threads here then check out feeder prices at the TEAM site and the two don't really tally. Sure there is pressure on the heavier feeders but 550lb steers at $1.33, 600lbs at $1.25 and 775lbs at $.97?? Who is buying these 5 and 6 weight feeders at that kind of money? clearly the feedlot meltdown hasn't happened yet (if it's going to.) All the rumored foreclosures of two weeks ago haven't materialised. Although if fed prices stay where they are won't it be the case that every calf bought since November will die in debt? Somebody is banking on higher fed cattle prices at some point in the not too distant future. Any of you feedlot guys care to explain these good feeder prices to me?

[15444]

Well, you know what Rick Pascal's response would be to such a question, and I think such an answer would be correct. Only guys with loads of cash and plenty of willingness to gamble are the Americans. In which case, I got a bunch of high 3-weight calves born last fall they can have right now if someone wants to offer a price.

[Willowcreek]

15444- I thought Canadian ranchers didn't want American money anymore....After all of Paskals complaining about the Montana ranchers outbidding him on calves last year and feeding them out and giving him competition. Articles coming out of Canada sound like the Americans should keep their money at home when it comes to cattle...

[15444]

Willowcreek, I'll take any money that's thrown at me right now, R-CALF, Canadian or otherwise. Certified cheque at a decent price and I'll hold them till the border opens to UTM. The biggest problem with me accepting R-CALF's money is I probably will have to convert it. Come to the point where cash is cash and I'll take what I can to keep the operation from going into debt...which I think is on the mind of the vast majority of producers. The ones who won't sell to certain people (ie R-CALF) are the same ones who have basically nothing to lose because either they have off-farm income or, frankly, some sort of insane industry pride thing going on. I would laugh at someone trying to explain to their banker why they can't pay the interest on their $300,000 dollar debt because they turned down an R-CALF member's offer for their cattle. Just doesn't make sense at this point in the game.

No indication from our government or industry on what their plans are for the year ahead. Might throw a few billion into the pot and hold some people over for another year....but personally I would rather see my cattle fetch a decent price at the auction mart, rather then walking out amongst them, counting them, and then filling out some government forms for subsidy money every year.

[Willowcreek]

15444- I hope you guys make out--- Thing that gets me about this whole border issue- Now its to the point that the whole border will probably soon be closed to any Canadian beef- None of this would have got that far if a few years ago we could have just got mandatory Country of Origin Labeling-- someway to distinguish US beef from the imports.... Now its become a do or die battle between the cow/calf producer and the big packers with the Canadians caught in the middle-- and it will not end for sometime......

[kpb]

grassfarmer, the feedlot meltdown is in the process of happening right now. Any feeders that were bought after mid-November of last year, which is the bulk of those on feed right now, are losing money, big time. It's pretty easy to figure out--those feeders went for upwards of 1.30 for 5-weights which is $650. Your feed costs at average 6 lbs of barley a day plus silage and mineral are around $120 and then you have yardage, interest, etc for, say, $160 to this point for a 8-weight feeder to now. That's conservatively $810 in costs for an 8-weight and you might get .85 or $680 after selling costs on a good day right now. So you're taking a bath of $150 per head in the yard. Ug. All these figures are rough off the top of my head but you get the idea.
I bought feeder heifers slightly earlier than this in October and November when prices were better to me but I still figure that I'm breaking even only right now--two weeks ago I was looking at a real good profit. And I think my 550 lbs to 600 lb heifers in the fall were bought right at average .88 per pound. Still tough to make it work at current prices, grassfarmer.
The reason you haven't heard the feeders crying yet is that they're all crying at home and they're hoping like crazy that feds go up before their feeders are ready to go. If you've got 8-weights in the lot right now like I do, you can wait for a while before facing the music. So we're all waiting and hoping.
But grassfarmer if the current situation doesn't change or gets worse (no export boxed beef allowed) the calf market in the fall will be an absolute disaster. There will be no feedlot money left to buy anything because at some point all these heavy feeders have to come to market and the losses realized. The feeders have been in the glue for the last two years and many of us thought this year we'd dig out a little but this latest fiasco only makes it worse. It's pretty darn bad when the best you can hope for is to break-even and I feel lucky to have bought when I did.


kpb

[grassfarmer]

kpb, you have confirmed my analysis of the current situation and expanded on it. BUT the question was who or why was anybody paying $1.33 on 550lb steers yesterday? I find it strange that the feeders haven't dropped to the 60 cents/lb mark like they did last February or will that happens once more numbers come to town?
I sympathise with feedlot owners I'm not one of the cow/calf guys that hates the feedlot sector for stealing our calves.

[farmers_son]

Willowcreek: We realize the underlying issue with R-Calf is Country of Origin Labeling. I also realize that R-Calf is aware of the problem in the U.S. with packer control of the industry and that the producer does not receive their fair share of the consumer retail dollars spent on beef. I am also sure that R-Calf is aware that 50% of beef consumed in the U.S. would be exempt from COOL. Even if COOL was successful in increasing consumer demand for U.S. beef it is naive to believe that the primary producer would receive the benefit from that. MCOOl would force the producer to incur extra costs with no offsetting extra revenue.

It would be wrong for the U.S. producer to underestimate the determination of the Canadian beef industry and the Canadian primary producer to survive. We are not going away. U.S. trade actions at the border have created a temporary benefit for the U.S. producer with serious long term consequences. We are already seeing increased packer capacity in this country and the latest R-Calf injunction has spurred interest in even more. During 2005 Canada will dramatically increase its packer capacity all at the expense of packers in the NW United States.

I would point out that Canada is exporting beef right now to Hong Kong, a market that is blocked to U.S. beef. Canada is not going away. We will either be part of the North American beef market or we will be a new competitor in international markets. It is very foolish for the U.S. producer to believe they can keep out imports of beef, they cannot. But the actions of R-Calf and other interest groups like them are serving to make Canada a more independent competitor in the domestic, North American and international beef markets.

Once the NW U.S. packers close and the beef packing industry moves north of the 49th parallel, Canada will become the new best market for those Montana calves. So everything R-Calf does to lower our market price will in the longer term only come back to bite the Montana producer in the pocket book.

[cowman]

Willowcreek: I really like the idea of MCOOL both for the USA and Canada...but for different reasons than you do? You obviously believe the American consumer will buy a product stamped "Made in America" and perhaps you are right! At least until they realize corn fed Brahma really doesn't cut it! As far as the Canadian consumer eating a product marked "Product of America" ...well I guess we know what would happen there, right? I mean after how your country has been screwing us over the last few years?
Now I also wonder if trade ever resumes with Japan if you would extend that MCOOL to your exports? Or would all those tasty Albertan steers, that you have been shipping with the USDA stamp, have to be stamped "product of Canada"?
I do realize that R-CALF thinks MCOOL will in fact put up an artificial trade barrier to keep out Canadian cattle and really has nothing to do with giving the American consumer a choice, but if you want to maintain that fantasy well then you can? I hope you can soon get some kind of actual traceback system in place so you can actually prove the "product of the USA" is in fact a true blue American product? Or does R-CALF still believe in the policy of traceback for everyone else except their members? If that is so then maybe you could also argue that the R-CALF owned cattle in Canada are in fact an American product? Sort of have your cake and eat it too?

[Willowcreek]

Cowman- I think the day will come when Canadians will be screaming for COOL too--About the time AFTA, CAFTA, Free Trade of the Americas, and the many other trade agreements being worked on kick in and the multinational packers are able to ship cheap cheap South American beef in thru the US and into Canada as a US product using NAFTA.

Packers don't care about quality- they deal in quantity and cheap prices...If they cared about quality they wouldn't be shuttling beef out the door the same day its slaughtered-- They have slowly been accustomizing the consuming public to generic lower quality beef- chemically aged or in most cases not at all...Many of the younger generation don't even know what good aged beef is.....

[kpb]

grassfarmer, I think there are a couple of factors at play here with light feeders selling so well. I think there are some American and Canadian buyers speculating that the border will open by the time these light feeders are grassed, then finished next fall (likely to finish around December or January). There are some guys like my neighbour who has too much feed (swaths) this year and who bought calves three weeks ago just to use up the swaths and thence to grass. There are lots of guys who grass every year and will buy calves no matter the cost because their land is paid for and the grass grows and it's rough ground so they can't hay it. There's lots of guys like that. Then there are the feedlots who are still trying to recoup their losses.
I run a cow herd and grassers and background feeders so I guess I see a little of every side. I will generally buy between 300 and 500 grassers every year to run on rough range near Lac La Biche. So what should I do this year? If I buy them I'll likely be paying too much like everyone else currently is. But if I don't the land may sit idle or I'll have to contend with renters which, to be blunt, is a pain. That, I think, is the biggest reason for the high price on light calves--all the ranchers who grass cattle are in the same bind--they basically have to buy every year.
We all know how optimistic producers are--always looking for a better next year but feeders, I think, are even more optimistic. A feeder will keep buying calves until the bank says no because he is always hoping to make a profit and wipe out his losses from previous pens. I think light feeders will continue to trade high until the feedlots absolutely can't buy them. But grassfarmer it is a very bad sign for future prices to see the heavy feeders and fats trading so poorly because it means that eventually the guys who own these heavy feeders are going to run out of money to buy the lights.
Grassfarmer, the biggest problem with this open again, closed again border is that it wears a person out not knowing what the future will bring and trying to make major business decisions based upon ????
I guess hope springs eternal in the feedlots and grass operations in this country.

kpb

[bombay_43]

Grassfarmer, where do you find this TEAM site that you talk about?

I usually check out the prices in Alberta at Ropin the Web. http://www.agric.gov.ab.ca/

The prices shown for 5 to 600 lb. weights, are considerably lower than your quotes on this site. I find the comparisons interesting here, as it gives both this week, last week, and last year same time.

[blackjack]

...bombay...it runs under the Calgary Stockyards out at Strathmore...try www.teamauctionmart.com...

...kpb...I agree with your lastpost...this back and forth crap with the states has got really old...being the same type of operation as yourself makes it very tough sometimes in which way to go...the boys that sold 700 weight and up three weeks look likes the right move...looks like tough slugging ahead for the heavier feeders again...

[whiteface]

I agree totally. I have some good young bred cows (May calvers) to sell and keep trying to guess when is the best time to offer them. Open again, closed again is wearing us all thin. Have a good day all!

[grassfarmer]

Bombay,
TEAM are at www.teamauctionsales.com, you need to sign in to use it the first time but once signed in you can check out the lots for sale. I find the extra information they give on size, breed, weight, type and owner of the lots gives you a better grasp of what the market really is - they also have pictures. VJV at Ponoka also list the CSLA listings on their site with details but no pictures.
I have found these powerful tools to assess what the market is like for the type of cattle you want to buy or sell. The market reports in the papers are largely a work of fiction and the averages on ropin the web are so sweeping they aren't that helpful.