cow herds?

[cowman]

At a recent farm sale I was talking with a group of guys. There were a few cows going to be sold and they were all speculating on what the price would be. Three of the four were looking to quit cattle this fall.
I suggested $1,000 might be about right for a decent cow and they agreed they would be happy to sell for that.
What is with that? These guys were relatively young and these were old time cow herds from 75 cows to 160.
I get around quite a bit and in my area the small cow/calf operations are definitely bailing. A lot of pastures never got grazed this year...and these weren't johnny come latelies!
Incidently the farm sale was a 300 head purebred operation that was quitting cattle and moving to Sask. to grain farm!

[kato]

Around here so far they are going for 650 to 700 dollars at the auctions, with very few going as high as 900. I think we'll have a better idea in a couple of weeks when the bred cow sales really start. So far there seems to be a lot of dispersals in the sales that have been advertised. It sure seems to be more sellers than buyers.

I guess the 20 cent a pound salvage price on a cow that loses a calf is having an effect.

[PureCountry]

Good for them. Should we celebrate? I'll bring the cheese.

[cswilson]

Moving to Sask. to grain farm now there's a man needs his head examined lol.

[melvill]

rook, basically what any contract like the AU Maximizer contract does is allow you to buy price insurance. You pay $22/t for the right to be paid for any cash price increase - any combination of futures and basis - that is available between the day you deliver the grain and, in this case, July '06. It doesn't mean that you get paid for the highest price that happens between now and July - you have to pick a price.

Picking the price is the trick. My experience is that producers who use these contracts have a very hard time with disciplining themselves during a rally to phone the grainco and say 'I'm picking today's price for my Maximizer'. They're always afraid that, on days when the price is rising, the price will be higher tomorrow. Or, on days when the price is falling, they're afraid it might go up again tomorrow. The result is they often wait until the last minute to lock in the price or don't do anything at all.

You need to know if this price-increase-insurance you are paying $22 for covers only increases in futures or is it for an increase in the cash price. Be careful if it's a cash price - a nice increase in futures can be eaten up by a weakening of the basis.

One more thing. Every producer I talk to these days is bullish canola prices. $22/t or 50 cents/bu is a lot to pay for a bullish outlook.

[nw9flynn]

I agree with Melvill,

$22/tonne is very expensive. I honestly do not think that the market has that much of a rally in it, or if it does not much more than $22.

Max I think that if you see a $10-15/tonne rally, make some sales.

[cowman]

I talked to the guys son in law and their thinking was they could farm 5000 acres and do a lot less work than the 2000 acres they had here. The owner is 65 and doesn't enjoy the winters anymore. I don't think money was the problem.
They bought good heavy clay land around Regina apparently all in one block.

[rook]

Thanks for your comments.

To answer your question melville it is only the futures you have to watch.

[charliep]

Have had calls myself on this program.

Highlighting Lee points, watch your basis - you will have locked the basis level on the day you signed the contract so be prepared to live with it.

I also note the carry in the market - $33.50/tonne yesterday between November and July. I have a fear that this is a market that could be close to a bottom but will loose carry through the winter - that is, deferred months will slip lower.

I also note this strategy involves doing everything on the same day. I like the philosophy (realizing we have left grain marketing behind and are now talking speculation) of buying cheap and selling expensive. That moves things into a futures/options strategy.

[FRENCHMAN]

The old fellas 65 and he wants to grain farm 5000 acres..Now thats different.Most guys are thinking of shutting it down at that age.

[15444]

Can't keep a good man down.

[wauchope]

Grain farming in Saskatchewan ,Well one thing Grain farming is a lot easier than working cattle and I would do it in a minute if I could afford to keep on losing money

[wauchope]

with only 60% of this years crop off and a lot of what did come of isn't in the best of shape, and given the calf prices this fall, the work involved with cattle may not seem quite as difficult.
For those that do sell in AB at this time and buy land in Sask., there is a lot of gain to be made if grain prices ever get where they need to be. Saskatchewan is benefitting from the activity in the oil industry and once they get the highway completed from Fort Mac to Saskatchewan I am betting land values in some parts of Sask. take a sharp upward turn.

[cswilson]

Emerald where the Fort Mac highway is going in Sask. is so far from anywhere it's not funny-it's going to be 100 miles north of any agricultural land-all it's going to do is take away all of the northern business away from Saskatchewan.

[cswilson]

what urban communities are near the proposed highway cwilson ? It will be unfortunate if it is built to the detriment of any existing city in Sask.