Drought phobia, high feed prices and volatile beef markets have many North American cattle producers thinking twice about expanding their herds.
Normally when fall prices improve because of a short calf supply, producers start to think expansion. Yet statistics show herd numbers are in a holding pattern, even with good calf prices paid at auction over the past six months.
“Prices will be better if there are normal weather patterns but it will not be substantially better,” said Sheldon Wilcox of Nilsson Bros. Auction at Clyde, Alta. Nilsson Bros. owns a chain of auctions across the Prairies.
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The company has seen steady prices for replacement bred cows and cow-calf pairs. However, the number on offer is at historically low levels.
Average prices for better young bred females are between $1,200 and $1,300. That provides enough cash for people to recover their winter feeding costs, said Wilcox.
In areas of severe drought, people are more likely to make sure they have ample feed and water before they buy more females.
“People are a little leery about rebuilding,” said Canfax analyst Debbie McMillan.
“There is no mass expansion.”
Poor weather last year resulted in disappointing harvests. Lower farm incomes mean people have less to spend on replacement livestock. Maintaining the herd at its present size is enough of a management challenge.
“If they kept the cow herd, they spent a lot of money on feed,” McMillan said.
Drought remains the wild card. Late spring snowfalls are refilling prairie dugouts and there is some runoff, but it may take another year to restore pastures.
All this means the cattle cycle has not moved. The cycle normally repeats itself over10-12 years where herds consolidate, expand, retract and liquidate.
Some expansion happened in Ontario where the beef herd increased by four percent. Some minor increases occurred in Manitoba, Saskatchewan and British Columbia, but many females continue to go to market rather than remain in the breeding herd.
Retention of breeding females is a major signal that expansion is starting. Particular attention is paid to the number of heifers killed as opposed to the number of steers. On average, for every 100 steers sent to market, 55 heifers are sold for beef. Since 1998, 75 percent of the heifers were slaughtered. This trend slowed to 69 heifers for every 100 steers on feed in 2002.
Reducing the calf factory means there are fewer available to finish for beef.
Last year, nearly 900,000 cows were slaughtered due to harsh conditions. The kill was largest in Alberta where 340,000 cows were removed.
The Canfax cattle-on-feed report for March 1, 2003, said placements are down 30 percent from last year at 787,445 head. More than one million head were in feedlots the same time last year.
The number of cattle sold through auction markets in February 2003 showed Alberta and Saskatchewan were down 27 percent, or 55,000 head, from 2002, which supports the decline in placements.
Fed exports are down nine percent from last February and slaughter of fed steers and heifers is down five percent from last year.
American analysts are not convinced expansion is coming soon because of feed and water shortages.
The United States drought monitor has observed extreme to exceptional drought across most of the western cattle raising states, with no relief in sight.
