From the number of calves available to what they’re being fed, the situation in the cattle-feeding business this fall couldn’t be any different than it was during the fall of 1993.
Cow-calf producers were riding the crest of the highest calf prices ever seen. Cattle feeders had to pay those pretty prices because there weren’t enough calves to go around, even with the western Canadian herd growing at a healthy four or five percent annually.
A dry summer on the northern Prairies meant calves started to come to market early in August.
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And early frost downgraded a majority of the wheat crop to feed, providing a cheap, readily-available substitute for barley in rations.
With feed cheap in 1993, buyers were able to pay more for stock.
Fast forward to 1994. A balmy fall after a near-ideal summer means many calves are still out on grass. But that same weather also means a higher majority of the barley crop is grading malt and wheat isn’t grading feed.
Prices way down
What’s happened to calf prices? They’re way down, by an average of $15 a cwt.
Ron Gietz, livestock market analyst with Alberta Agriculture in Edmonton, breaks down that fall in price this way: He’s had cattle feeders tell him higher barley and feed wheat prices mean their costs of gain have gone up by as much as five cents per pound.
“That takes at least $5 (per cwt.) out of the calf price,” he said.
Another $2-3 per cwt. is taken out because Alberta cattle feeders no longer have the Crow Benefit Offset subsidy (and Saskatchewan feeders have lost IRMPEP.)
As well, after trading most of the year at $73 U.S. or less, the Canadian dollar has appreciated to $74.50, just as the fall buying season starts. That knocks a few more cents out of prices.
Gietz said the remainder can be attributed to lower prices for slaughter cattle.
But demand has tapered off too. There are fewer U.S. buyers in the Western Canada market, and the very real prospect of American calves being fed in Canada. Gietz says that shifts the dynamics of the market.
And, there was a nine percent increase in the 1994 calf crop in Western Canada. In one year, that’s 300,000 more calves for buyers to choose from.
Still, Gietz says calf prices have fallen harder than most everyone expected. “High feed costs really snuck up on us.”
