ROCKY MOUNTAIN HOUSE, Alta. – Slaughter cattle could have fetched around $123 per hundredweight for A1 steers this December if Canada had an open border to the United States.
Instead, fed cattle are selling for considerably less into a surplus beef market as American trade is halted due to a single case of bovine spongiform encephalopathy.
Market uncertainties for grassroots producers will persist even if the borders open next spring, said Neil Blue, livestock marketing specialist with Alberta Agriculture.
“We think there will be some cost in-volved in getting those cattle down there that will be passed back to us,” he told a producer meeting in Rocky Mountain House on Nov. 12.
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Even as the Canadian dollar climbs against the U.S. dollar, cattle prices should still be profitable, although no one is sure what the futures board might do and what kind of basis will exist next spring.
This market confusion means producers must find their own way out of the crisis by studying their personal finances and taking advantage of cost-saving measures.
Feeder calf prices are roughly equal to what was paid last year, but finished steer and cull cow prices are disappointing, Blue said.
The U.S. wants market-ready cattle immediately and cannot buy them from Canada.
American September feedlot placements were up by 13 percent compared to last year for the same period. Slaughter weights are down by 20 pounds over last year so Americans are producing less beef during a time when consumer demand is high, said Blue.
In Canada, this fall’s steer and heifer slaughter is about 10 percent lower compared to last year at the same time. Cow slaughter is down considerably because there are not enough available processors or uses for the meat.
Feedlot placements are about 30 percent below normal because many ranchers have decided to hold off sales until markets are more stable.
All this leaves producers wondering what to do.
“Time will tell what ends up being the right decision,” Blue said.
Market advisers say producers must consider their cash flow needs and what level of risk they are willing to take.
“Those who take the risk may reap the big rewards,” he said.
Those who decide to retain their cattle over the winter must examine their facilities for available feed, water and space. They must also be honest about whether they have the know how and time to feed cattle over the winter.
Those who decide to sell now should watch the markets and bargain for better prices.
“It’s not my favourite situation to drop them off (at the auction) and see what happens,” Blue said.
To make these decisions, he advises running a calf budget and figuring out the cost of gain, cost of feed and cow costs.
Cull cows have no value if they are not pregnant but in some cases they may not survive the winter and so should be sold.
Bred heifers pose a special problem. They are selling between $800-$1,200 each. If they have a calf and then get culled, they could be over 30 months of age and fall into the cow category and lose value overnight.
The most common predictor of a cow-calf operator’s profitability is the amount of winter feed his animals consume. The more that is fed, the greater the possibility that the operator is losing money, said an Alberta Agriculture forage specialist.
There is a wide range of costs on every farm across Western Canada.
“The reality we see in the business is that costs keep going up and we have to deal with them,” said Grant Lastiwka.
First, cows need to be fat when cold weather sets in. It is possible to save about $50 on feed per cow if it is fat going into winter. Sort the fat from the thin and the young, because the latter need additional care. Provide windbreaks and shelters, especially for thinner cows because a cold wind takes away their energy.
It is cheaper to graze than haul feed to cows, but early fall snowfalls in many areas have forced a change of plan. Cows had to come home and winter feeding started sooner than expected in some cases because cows could not dig through the snow.
Those cows that can get to stockpiled grazing or swaths may receive better nutrition than hay because the cold weather preserves it.
Swath grazing is about 50 cents a day cheaper conventional feeding. Stored feeds need to be available for emergencies but since there is a lot of poor quality straw this year, forages should be tested for feed value.
