The fall calf run?

[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. :cowboy:

 

[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.