feeder cattle

[kpb]

cowman and blackjack, thanks for your kind words. Although I have stopped posting I do still enjoy reading the threads frequently and chuckling at the give and take.

I'm happy that we didn't buy any backgrounders for the first time in a long time but I will likely buy grassers in a couple of months. I don't think we'll make money on them but I've got lots of rough pasture in excess of what I need for the cows and what else can I do with it?

cowman, since our calves are priced off the U.S. market, an increase in the value of our dollar verses the U.S. dollar means it costs more for a U.S. buyer to buy our calves, thereby making them worth less. U.S. buyers will only pay in Canada what the U.S. market, less the basis, allows them to pay so, in effect, a rising Cdn. dollar means they will pay less in Canadian dollars for our calves (if they have $500 U.S. to spend then that is $602 Cdn at a Cdn dollar conversion rate of .83 but only $555 at a .90 cent Cdn dollar).

finally, fellows, for what it's worth, I think we are in for lower calf prices this fall than last fall and lower again in 2007. I think we missed the top of the market during the BSE chaos and won't see top-of-the-cycle prices again for about 10 years. I remember getting $450 for my steer calves several years ago at the bottom of the cycle. I think we'll see that again in four or five years. Yes, there's lots of cows being sold here but the overall North American herd is still too big.

I'm not gloomy by nature, god knows, since I've been in this business a long time (I must be a dreamer or deluded) but I'm afraid BSE has robbed us of our best calf-selling time and we are now on the downslope of the cattle cycle. I think we're in for very rough times in the next five years and I suspect that the full-timers like myself and blackjack are going to be up against it.

lastly, whatever happened to farmers_son?

kpb

[PureCountry]

I'm hearing the same predictions at every meeting I go to kpb. We're on the down hill side now. And from my own experience, I think feeders/backgrounders like yourselves are usually the ones have the toughest challenge staying on the roller-coaster. Good luck to you. Good to see you post again.

[grassfarmer]

I'm aware of the concept of the cattle cycle in N America but haven't seen the reality yet. Does the price the consumer pays for beef drop during a downside cattle cycle? I'm guessing not - in which case we are once again seeing more value theft from the production chain by processors,
wholesalers and retailers. Perhaps this should fuel our ambition to retain control of our cattle through to the consumers plate?

[kpb]

grassfarmer, you are quite correct in that, generally, the prices in the store do not fall much, if at all, at the bottom of the cycle. And you are also correct in your conclusion regarding more money taken out of the pockets of ranchers.

But I can assure you from personal experience that the bottom of the cycle is brutal. When I said $450 for a steer in the fall I wasn't kidding--I've been there and I think we're going there again. The irony is that the cycle is predictable and easy to read--when producers see high calf prices they keep back their heifers for breeding which results in fewer short-term calves for sale and, hence, higher prices. But as more and more heifers are kept for breeding, eventually there are more and more calves which results in prices dropping. As calf prices drop, producers sell all their heifer calves and keep none back for breeding in an effort to keep their overall incomes up. So more calves flood the market and prices drop even more. Eventually there are fewer heifers bred and, hence, fewer calves and the cycle turns.

It's a well defined and historic cycle and I think when you look at the North American herd we are well on our way through the heifer retention phase and into the beginning of the flood the market with calves phase. Just my thoughts but it sure looks like it to me.

PureCountry, thanks for your gracious welcome. One of my neighbours dispersed his entire herd a month ago and the other told me last night that he was having a dispersal of his herd in December (700 breds). I guess I'm just about the last cattleman left in my neck of the woods and I'm starting to feel like a bit of a dinosaur. Maybe I should just sell my breds too and turn the land into acreages for all those city folks with cash burning a hole in their pockets.

kpb

[cowman]

Well I hope you are wrong kpb, but I suspect you might be right!
I know around here a lot of smaller and mid sized herds have disappeared. Now those darned cows are going somewhere and probably with a lien from the bank attached to their butt! If the calf market sours those "expanders" might not be able to pay the bank?
Now if I listen to my local auctioneer there is a pentup demand for cows south of the border as well as feeder cattle, which might keep markets up one more year...if they get the darned border open for cows?
But quite frankly long term it doesn't look all that rosy in my opinion. We have too many cows up here. The death of the CROW and the government refusing to fight the grain wars ensured that? Poor government policy got us into this over supply situation. I don't buy the story the federal government couldn't afford to support the grain business...not with all the billions and billions wasted over the years on goofy policy and outright corruption! So now today the chickens come home to roost and we are paying for it?
I do believe if anyone wants to stay in the cow/calf business they need to get mean and lean and get their debt under control or paid off!

[cowman]

One other thing kpb: Regarding farmers son? Don't know what happened to him. Maybe he was so discouraged when his hero,Paul Martin, lost the election, that he just can't bare to face the music?
On the other hand I think he mentioned he joined up with the reserves so maybe he is over in Afhganistan argueing those old Taliban boys to death! Maybe after having to go a few rounds with him they will see the evil of their ways and all join up with the Liberal party or something?

[cowman]

food4U: Just wondering, now that you are "officially out of the cattle business" what do you intend to do with your hay and pasture?

[blackjack]

...cowman...with the bse tax at the border(i wonder if cargill and tyson have the basis problems with the boxed beef) and our lack of finding new export markets is definitely going to add to the pressures on our own markets...

...kpb...heck i'm only in my mid forties and i hate the thought having to work for some one else other than tyson and cargill... and also why would i want to take advantage now of high land prices when maybe in 20 years they might be in the tank...lol

[blackjack]

...one other thing ...grassfarmer does bring up a great point...with our cheaper cull cows did the retail prices ever get reflected in lower retail prices...we raise our own beef to eat so at times not up to the reality of what the consumer is paying for theirs...

[Horse]

Talked to a couple of feeders today and 1 feeds about 50,000 so he probably knows something but this basis can get you 8 cents /# but they tell me they rip you on the age aparently cargil has thier own mouth guy anyway ! load of fats had a 28% regect due to OTM and a good amount of those were age verified so I guess there is no wining The other fellow lost $5000 on 1 load of fats Kind of reminds me when I used to ship fats to Gainers and would get 25/30% dark cutters or a carcas weight 1# over the limit and get docked .
It forced me to quit finishing calves and by the sound of it, it will finish some more small feeders.
By the way I asked the large feeder if these cattle will make money and he said a resounding NO.