What is this market telling us?

[cowman]

Saw some fairly decent 700 lb. steers sell for $1.20 today. Seems the feeder market is on the way up? I have 30 yearlings and so does the boy. I've actually made money(well on paper) on these calves by keeping them. I guess they are in that 800 lb. range. Sure never fed them very well last winter but they went right ahead this spring when they hit the grass.
What is this market telling us? Well first of all...a good percentage of these feeder cattle are going to US buyers! I suspect they think the border is going to open real soon?
Also I know a government vet who says they have been instructed to be ready July 14!
Hopefully we can finally see some light at the end of the tunnel?

[grassfarmer]

What is the market telling us? Somebody, somewhere - either with or without money is speculating .... again. It is impossible to predict prices more than a week ahead in a post bse market and it is even less possible to guess political outcomes of border bans, court cases etc. If you have yearlings to go and can get $1.20 for them they're gone - simple decision in my book(As long as they are not set-asides)
Hey, Cowman what are you doing with little 8 weight yearlings this time of year? I thought all those big, strong winter born calves of yours would have been fat by April ;o)

[farmers_son]

CME August Live Cattle closed at 80.62, the highest close since the confirmation of the BSE positive in Texas. I think it is fair to say that there has been no consumer backlash regarding the manner which the USDA handled the BSE situation and the fact that the U.S. acknowledges it has BSE too. BSE appears to be a non issue with consumers in the U.S.

In Canada consumer demand for beef actually rose after May 20.

[farmers_son]

I haven't heard of the outpouring of support for the beef industry taking place in the US but of course it may be happening and just not being reported in our media.

Cowman what kind of cattle are you raising, my limo's are in that 800 range by January. Heifers are around 1000 now and weren't fed a lot of grain overwinter.....just kidding cowman I do NOT want to start a war on cattle breeds !!!! Good for you if you made money on your yearlings....hopefully everyone will make money in the cattle business before the end of '05'
By the way I was in Red Deer and surrounding area yesterday and this AM. The crops look great.

[cowman]

Well my thirty were the scrubs, the boy bought his late last fall. It's amazing what a little starvation can do to keep weight down! I doubt we had $75 worth of feed in them, this spring. Since then they've been out on native grass and are doing well.
The few replacement heifers we kept were fed better. Decent hay but no grain. They probably are in that 1,000-1100 range. Turned the bulls out July first on the heifers. Cows the middle of June.

[cowman]

Lots of pasture around the country, so calves should come off looking pretty good in the fall. The haying is in full swing around here, saw some great crops on my way to RD this week. Silaging going strong too....could be a good year if we get the cattle industry sorted out.

[farmers_son]

The rail price for fat steers and heifers has reached $140.00. Still below the $150 that was being paid the week before the border was expected to open in March.

Steers traded in Greeley Colarado recently 700-715 lbs 117.00-119.50. That translates to $1.47 a pound Canadian. Basis between Canadian feeders and U.S. feeders will remain wide after the border opens to live cattle yet this spread amounts to $190 per calf. Prices would rise further if the border opened to feeder cattle.

What difference if they are setasides? Set aside calves have been sold through the ring all along. A 700 pound calf with a set aside ear tag is not going for slaughter before October 31 anyway so it is not a factor.

[grassfarmer]

Cowman, you call me a tight Scotsman yet you try a little starvation to keep the weight off. I was always told it sometimes pays to feed cattle it sometimes doesn't - but it never pays to hunger them!

Farmers_son that's not entirely true on the set asides. 7-weight steers were discounted about 10c/lb through May and early June as a lot came to market in this area. I know a couple of producers that suffered larger penalties than that on 6-weights during the same period. No logic for it but I suspect it was profit taking on the part of the feedlot buyers.
I still have some set-asides to market but I am playing the waiting game on them - the closer we get to October 1st the less likely we are to be penalised plus if the border were to open the scheme would be cancelled the next day.

[cowman]

Well in normal times I probably wouldn't "starve" them, but here is my theory: In the fall of 2004 calf prices were not all that good? About $1.05/lb. on a 600 lb. animal(less on heifers)? If a person could basically maintain that weight until spring...there could have been a few more options...and maybe a better idea of where that market was going? Also cattle fed hard in the winter have a way of really compensating once they hit grass? We knew we had too much grass for the cows we had and weren't inclined to buy any more.
It wasn't really starvation. They were full all the time but the hay wasn't the best and a good portion of what they were eating was good straw. Two row barley straw, chaff laid on top of the swath, and the baler right behind the combine.
I doubt they gained 50 lbs. over the winter and that was perfect as far as we were concerned. They were out on their own by mid April on some natural pasture. They "maintained" until the grass greened up and then they really started to put on the pounds.
The main idea though was to keep them at lower weights because the market was so uncertain.
Hopefully by August the border will be open and the prices will have picked up some more. Should probably sell them now and take the money, but I guess we'll gamble a bit and hope we pick a winner...for a change! Have not been winning the last couple of years!
Anyway heres how I see it. If 600 lb. calf is worth $1.05 in fall of 2004, it comes to $630? 150 days on tough feed at 35 cents a day is $52.50? I want a few bucks for labor, interest etc. so I put the price up to $75. Maybe these aren't realistic prices but basically I get the straw for free minus baling/trucking costs(done by us). The hay was rained on fescue and cost 2 cents a pound. No electric waterer, no yard lights. Not good at pricing old banked grass...or for that matter pasture? So haven't really counted that in here.
If those same 600 lb. cattle, came through winter and weighed 650 by spring what would you need to get for them to break even? Well $630 plus $75 equals $705? So you would need $1.08/lb.?
Grass buyers just drool over calves that come to town "lean and mean"? Why? Because they know those hard fed calves will really go once they hit the grass!
I suspect a calf like that can probably pack on 250 lbs. over the summer, if the grass is lush? So voila September rolls around and you have a 900 lb. animal...worth what?...if the border is open and we have a bumper crop of cheap barley? Hopefully in that $1.10/lb. range? So hopefully $990 per animal. Is it enough? In my opinion, it sure isn't, but unfortunately that seems to be the darned cow business these days!
We have actually always basically done this. Sold the big steers off the cow, tough the small stuff through and feed the better heifers to a better weight for the feedlots or a pasture breeder.
It is amazing how a heifer loses a lot of the price discrimination once she makes it through her first winter?

[grassfarmer]

Interesting way to do it Cowman. So really your cattle grew at 1/3 lb/day over winter at a cost of $1.50/ lb of gain if your $75 really covered all your feed, feed and manure haulage and yardage costs?
I'd be frightened to do that as there isn't enough gain to spread the fixed costs over - what I'm saying is you really need to get paid big style for the compensatory growth you achieve this summer. Selling for a poor price will be a big loser for you.

As far as pricing grass goes I would call them .75 AU so if grass rents for $1 a day for cow/calf pairs your steers are grazing 75 cents a day of grass. I wouldn't charge any less on banked grass - although the quality may be lower than green grass it is replacing feeding hay and yardage costs at a time of year when feed is more expensive.

[cowman]

Well I try not to look at it that way but maybe I should! I don't know...the darned grass is there...and I have to do something with it. Not to keen on renting it out either.
The only land that isn't paid for is the 320 acres the boy bought last year and that was truly a sweetheart deal. We actually have too much grass for the cows we have, but I figure better too much than not enough! They can always clean it up in the spring!
When we made the decision to keep the scrubs and buy a few more, we realized we would have too much grass for just the cows, even though the boy bought 40 more young cows. We also suspected the border might not open until the fall of 05 and we figured we didn't want to come to a poor spring market with 900 lb. calves. But we've always fed some calves for the grass market...usually our own grass unless the spring prices are really good.
A tough fed calf should be able to put on at least 200 lbs. by September? That isn't even a very impressive gain! Last year we sold them right around that 1050 lb. range. I suspect these calves might get there as they are gaining like crazy!
By the way, the sprayed out buck brush seems to be working. After killing it off we mowed it down with a brush cutter and the grass is coming on strong.

[cowman]

Oh and by the way grassfarmer, you might be right about the costs of manure handling, overhead costs etc.? I'm not really up on what that all costs me. The corrals are all pipe(and actually all on concrete) and long ago paid for...not by me but my father. No lighting, no electric waterer. Just a hydrant a tank and an old wood heater.
Haul the manure ourselves and look at it as at least a breakeven propostion due to the free fertilizer! Don't know about the fixed cost of feeding either...I mean we have the darned tractor running anyway to feed the cows?