Cargill and cows

[cowman]

A spotter for one of the local auction marts stopped in yesterday and he told me the cows are coming in pretty heavy...and have been for a fair while. He told me Cargill was now buying cows in a big way and processing them at High River! He also said the buyers were not bidding very hard as there was an abundant supply for everyone!
He also told me fats are pouring across the border and it takes an army of vets to preg check and mouth all the heifers!
Now I find this whole thing sort of weird? We built these modern plants up here to process and market our beef...and they can't compete with the American plants despite the "border costs" added on to every fat crossing?
What happens when/if the border opens to cows? Will they too flood across the border? Where does that leave our packing industry?

[cowman]

Oh and by the way this spotter told me the grass market was very hot! He said green steers in that 600-650 weight were bringing right around $850! Now I would say there must be some optomistic souls out there?

[cowman]

Bull sales have been hot as well, so obviously there is optimism. The producers that seem to be pessimistic are the older guys that want out of the business, they are still smarting from BSE and just have had enough.

[cowman]

And I would also add bred cow sales were pretty decent these last few months? Lots of cows sold for over $1000...in fact some very much higher!
I wondered where are these cows going and who is investing their money? I did get a thing in the mail from the local feeders association saying they were financing cows!
Maybe these optomists know something? I suppose if that border opens to cows the price will go up in a big way?

[smcgrath76]

I would suggest that we are seeing the strength in cows being bid out of heavier feeder cattle. In other words, let's bid on cows so we don't have to bid on feeders. In an integrated North American company this should allow you to process more beef at a lower cost. I don't think it is a direct reflection on the competitiveness of the Canadian packing industry, rather an expression of the advantages of being a North American or global entity.
I consider myself an optimist, but also hopefully a realist. To quote, "there has never been a heifer born in good years of the cycle that paid for herself through her calves".
I think we are on the downturn of the cycle, and I am pretty sure the guys buying breds around here for $1500 are either nuts, poor at math or have a tax problem I would love to deal with just once in my lifetime.

[cowman]

I am inclined to agree with you on this cow thing Sean. I have a hard time seeing bred cows being bought for $1300 that are worth $300 or $400 if they lose their calf!
The boy bought 40 cows in a private deal in 2004 and I thought he paid too much at $975, although they were top notch young baldy cows from a dispersal! They were bought with cash so no big debt hanging over them.
This spotter also told me the buyers want lean cows...not grain fed cows...which is certainly a break from tradition.

[cowman]

Yesterday we were talking about our yearlings and I said to the boy if we can get $850 for the steers right now maybe we should skid them. I truly doubt we have $60 worth of feed in them and they are green as grass!
He didn't think we should...apparently he is an optomist!
So if today you can get $850 for a 650 lb. steer($130/lb.) are you nuts to grass him? What will he bring in September when he comes in at, say 850?
4 1/2 months of grass at $20/month is $90. Throw in another $15 to get him to green grass. $850 at 8% for 6 months is $34? Salt and miscellaneous at $5 and you need $144 plus the $850 for a total of $994? Or $1.17/lb in September for an 850 lb. steer? I would say that it takes an optomist to hold them?

[PureCountry]

First off cowman, before he hits green grass, he's going to put on another 50lbs at least. So that's 700lbs. Then, 4.5 months is 135 days, and he should gain 2lbs/day on grass if he's green like you say. So that's another 270lbs, or be conservative and just say 225-250. So by September he'll be more like 925-950, if not more. 950 @ 1.17 = $1111.50.

Lookin at it half full instead of half empty might deter you from doin your math half-@$$ed!lol

[kpb]

I think there is little chance of seeing $1.17 a pound for either 850 pounds or 950 pounds this fall.

As smcgrath stated in a previous post, we are on the down side of the cycle which will lead us to lower prices over the next three or four years and culminate in a blow-off at the bottom. It is also a truism that breeding heifers now is a questionable practice.

I doubt that you'll see $1.10 for those heavier yearlings this fall. How can you when fats are in the mid-80's now and likely a little lower by then? I think grass cattle this year will be a losing proposition.

kpb

[blackjack]

...my experience of when we sell our 9 weight grassers is that there is usually about a 15 cent spread between the feeder price and the fat price...hopefully the fat price does not falter much lower... in saying that i guess i am hoping for at least a dollar/lb in august...