The fall calf run?

[options]

mnmtranching

Could you be more specific? I am unable to find any figure showing the US imports billions of pounds of beef from Australia. 663 million pounds in 2008 I found, but never a billion pounds and not even a sign of billions of pounds.

[Stocker Steve]

If they reduce the herd by that much, what happens to the hayground and pastures? Here it would be plowed up and farmed till it all washed away, but can they plant wheat or is there a gov. program like our CRP?

Land will go to grain farmers

Bez+

Is grain farming profitable in Canada or does it just lose less money per acre than cow/calf?

[Alberta farmer]

Steve: Grain farming is profitable in western Canada but like any farmer in North America we are experiencing the old "cost/price" squeeze! It costs a lot of money to grow a crop anymore. The equipment cost is huge!
In Alberta we have fairly decent crop insurance which is almost a necessity with our weather. In my area we have a short growing season which limits what can be grown. Basically the five crops that can make it here are wheat, barley, oats, peas and canola. The most profitable is canola but it can be touch and go some years and due to disease concerns can only be grown in a rotation of about once every three years.
I would guess an average barley crop would be around 90 bu./acre. Wheat around 60bu. for HRSW(more for CPS wheat) and probably 40 bu. for canola.
Our land prices in Alberta are quite high compared to Saskatchewan or Manitoba(the other prairie provinces). This has more to do with oil and gas developement than agricultural values. Sask. and Man.
are both catching up real fast in developing their oil and gas.

[Aaron]

Sounds like the market in Canada might finally adjust itself. Time to get free of this export-oriented business. Beyond the US, no one saw a dollar more for getting access back into any other country in the world. I don't know where some of our industry leaders get the idea that it is justified to produce excessively to flood other markets, including the US, with our beef. Just talking to a young neighbor (38) tonight. He has been downsizing the past year from 200 to 100 cows as he got too big for the amount of pasture he has (tired of dry-loting), and can't buy any because of the prices people seem to drive it up to. Pastures here have been going nuts lately (45 - 60 grand a quarter), when it should be more like 25. I think the last census of farmer age in Canada was 55...which tells me that within 10 years, agriculture is going to change dramatically up here.

It's unfortunate that the older producers will suffer this year...particularly in a bad economy. However, that might spur the change that has been put off since BSE hit up here. Many said they would get out, few did. Can't control fuel prices on any scale. But it's time to see the equipment and fertilizer companies take a hit in their pocket book with fewer farmers. It's ridiculous to compare implement prices in Canada and the US. I can buy a brand new MF 90hp loader cab tractor from Kansas for 1/2 the price compared to Manitoba. Figure in exchange and shipping..and you still can't come close to matching the price in Canada.

If we can contract 30-40% this year, fantastic! Any of the other Canucks remember the few years leading up to '03? Light calves hitting the $2.00 mark. Where was the national herd? 11-12 million? Then it exploded. Time to get it down to around the 8-9 million mark, or even less. If the packers want to leave, let them. I would imagine XL will soon become the only player in Canada. Even so, those producers that want to get their own plants up might actually have a chance. Our new local provincial plant is expected to start killing Nov. 1.

[Alberta farmer]

Aaron: I think you have the situation figured pretty correct. I find your land prices simply amazing! If land here was $45K to $60 it would all be bought up by wealthy city slickers for a playground! In fact a lot of land is being bought up for 10 times or more those amounts for "recreation use" around here!
I personally doubt the national cowherd will contract 30% to 40%? It might contract that much in Alberta...or at least central Alberta, but I can't see it happening across the country.
The American dollar is in trouble and that is giving Canada a lot of problems for exports, whether beef, pork, cars, lumber, oil and gas. The "experts" are predicting the Canadian dollar at par by the end of the year and moving higher in 2010. I hear you on the tractor deal...in fact just about every thing we import out of the USA! The multinational companies have thrown up a bunch of logjams to keep free trade from actually happening for the average Joe.
Feed is really in short supply up here and is very expensive. My neighbor sold 400 bales last week (1400 lb) for $120/bale in the field. Winter feeding will have to start fairly early here due to the pastures being so poor...probably the middle of October. I would suspect 210 days would be optomistic for many cattle producers in my area. With hay at 8.5 cents a pound the feed bill per cow is going to be over $600...just for the feed! The good news is grain is fairly cheap and there is a fair amount of straw available at around 1.5 to 2 cents a pound. A ration of 20 lbs. good barley straw, 10 lbs. barley, and about 1 lb. of 32% concentrate should work out to around $235 for the 210 days(feed only). I suspect some will do this if they want to keep their cows, but like you said there aren't a lot of spring chicks in this business anymore and this might be the thing that gives them that incentive to get out?

[Bez+]

Aaron: I think you have the situation figured pretty correct. I find your land prices simply amazing! If land here was $45K to $60 it would all be bought up by wealthy city slickers for a playground! In fact a lot of land is being bought up for 10 times or more those amounts for "recreation use" around here!
I personally doubt the national cowherd will contract 30% to 40%? It might contract that much in Alberta...or at least central Alberta, but I can't see it happening across the country.
The American dollar is in trouble and that is giving Canada a lot of problems for exports, whether beef, pork, cars, lumber, oil and gas. The "experts" are predicting the Canadian dollar at par by the end of the year and moving higher in 2010. I hear you on the tractor deal...in fact just about every thing we import out of the USA! The multinational companies have thrown up a bunch of logjams to keep free trade from actually happening for the average Joe.
Feed is really in short supply up here and is very expensive. My neighbor sold 400 bales last week (1400 lb) for $120/bale in the field. Winter feeding will have to start fairly early here due to the pastures being so poor...probably the middle of October. I would suspect 210 days would be optomistic for many cattle producers in my area. With hay at 8.5 cents a pound the feed bill per cow is going to be over $600...just for the feed! The good news is grain is fairly cheap and there is a fair amount of straw available at around 1.5 to 2 cents a pound. A ration of 20 lbs. good barley straw, 10 lbs. barley, and about 1 lb. of 32% concentrate should work out to around $235 for the 210 days(feed only). I suspect some will do this if they want to keep their cows, but like you said there aren't a lot of spring chicks in this business anymore and this might be the thing that gives them that incentive to get out?

I think you will be light on your feed cost - suspect it will go to a bit more for the year - not that you are looking for more "good news" - so that means if you sell that calf at 600 bucks (good luck) - you will lose at least 125 dollars a head just on a hay diet. And that does not figure in all the other additions - so the loss could go as high as 200 bucks (or more) a head.

Things have been heading this way for a long time with national average returns being in the negative for a couple of years. Combine that with the cost of land, the cost of start up and the average age of folks in the business ....

Three more big guys in our area are now "gentlemen farmers" with only 5-6 head - meat for the family only. One of them was running more than 500 pairs up to this summer.

Land has jumped here - what we bought in 2002 for $155K - we just had an offer of nearly $400K - go figure.

Our hay cost alone for each head this year on this place is going to be over 400 bucks.

No wonder the folks are getting out of the business - and no newbies coming in.

Bez+

[Stocker Steve]

Have you looked at winter feeding fewer cows and grazing more yearlings?

[Aaron]

Aaron: I think you have the situation figured pretty correct. I find your land prices simply amazing! If land here was $45K to $60 it would all be bought up by wealthy city slickers for a playground! In fact a lot of land is being bought up for 10 times or more those amounts for "recreation use" around here!
I personally doubt the national cowherd will contract 30% to 40%? It might contract that much in Alberta...or at least central Alberta, but I can't see it happening across the country.
The American dollar is in trouble and that is giving Canada a lot of problems for exports, whether beef, pork, cars, lumber, oil and gas. The "experts" are predicting the Canadian dollar at par by the end of the year and moving higher in 2010. I hear you on the tractor deal...in fact just about every thing we import out of the USA! The multinational companies have thrown up a bunch of logjams to keep free trade from actually happening for the average Joe.
Feed is really in short supply up here and is very expensive. My neighbor sold 400 bales last week (1400 lb) for $120/bale in the field. Winter feeding will have to start fairly early here due to the pastures being so poor...probably the middle of October. I would suspect 210 days would be optomistic for many cattle producers in my area. With hay at 8.5 cents a pound the feed bill per cow is going to be over $600...just for the feed! The good news is grain is fairly cheap and there is a fair amount of straw available at around 1.5 to 2 cents a pound. A ration of 20 lbs. good barley straw, 10 lbs. barley, and about 1 lb. of 32% concentrate should work out to around $235 for the 210 days(feed only). I suspect some will do this if they want to keep their cows, but like you said there aren't a lot of spring chicks in this business anymore and this might be the thing that gives them that incentive to get out?

There should be a good run of cows out of our area as well. Highest price per tonne I have heard so far is about $70 - 80 (beef hay)...which in this area of plentiful hay is scary. A lot of hay sellers sold little last year, so year old hay is going cheap. Still, I don't know how some people can pencil it with beef cows...managing the operation like a dairy herd. Pastures are good and more people seem to have stockpiled grass. If the weather holds clear, I should be good to at least the middle of December.

Steve: the margin on grass yearlings is so slim nowadays that for most old-timers, it's not worth the hassle. We sold yearlings in the spring and some a few weeks ago. The difference in net price? In some cases we lost money (~$5-10/head) and in some we gained ($10-20/head). If all you can do is make an extra $20 a head (before subtracting costs), while putting an extra 200lbs on them, where is the point? If some one wants to give me $1.11/lb for 715 lb yearlings, as opposed to .81 for 935 lbers...all the power to them. Saves me an extra 4 months of worry.

[Stocker Steve]

The buy/sell margin of 1.11-0.81= $ 0.30 is huge. No one can make money with that. I try to keep it under $ 0.15.

[Alberta farmer]

Bez: You might be very right about my feed costs being low...I was just picking out a "best guess" scenario. As I said before the high cost of feed will not affect me as I am dispersing this fall. I'm trying to get some more age and weight on the calves before the whole works go to town.
Steve: I think this year is sort of an anomily for grass cattle, at least here in Canada. A falling market and poor growing conditions can do that, but grass cattle can be risky for sure?
I like how you guys are "cost conscious"....it is refreshing to see some people actually know their costs and make decisions based on economic reality! Sadly lacking in a lot of farmers/ranchers in my opinion.
I am amazed when I read what some of the people come up with on this site? It seems many couldn't care one bit if they make a dollar or not!
As much as I love the country way of life I decided a long time ago I wasn't all that keen on working for free. The last few years the net profit has been pretty poor in the cow business and hey, there are only so many hours in the day to put the beans on the table and keep the wolf from the door!
I am quite jittery about this whole economy thing? I sure wish the wizards in Ottawa and Washington would get their act together and get this darned economy stabilized, instead of goofing off and playing silly games! I got a bad feeling about this one. Just my opinion.

[Stocker Steve]

There is a lot of market risk with stockers. One way to reduce is to buy light cattle. I typically buy 3 wts.. I have also bought LRP insurance in the past but I gambled this year and won. LRP was in the low 90s this springs and I sold 737# for $103.50 in August. Local market is in the 90s now.