VIRDEN, Man. – Wintering calves might be a good option for beleaguered cow-calf producers, says Michael Buchen, a Manitoba Agriculture business development specialist for finished beef.
Fall calf prices are in the dumps and threatening to slide further if the Canadian dollar continues to rise.
“If you’ve got some feed, and your wife and banker are behind you, I think you should hold onto some of these cattle,” Buchen told the Manitoba Feeder School held recently in Virden.
“If you have to sell the cattle, we know they are going to bring from $480 to $600. If you can live with that, then maybe your first loss is your best loss in this case.”
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Before his presentation, Buchen had spent the morning at the local auction mart, where he watched 1,500 calves fetch $500 to $630 a head.
“We know that’s not enough for any of us here,” he said.
One bright note is Alberta’s Farm Recovery Program, which will inject $160 million into the province’s livestock sector through the Canadian Agricultural Income Stabilization program.
Buchen said the support payment might bring Canadian feedlots back into the market.
“We pumped $777 million into the total BSE program, so when you look at $160 million, that’s a substantial amount of money,” he said, adding it might add five to 10 cents to the price of calves in the coming months.
However, Manitoba and Saskatchewan are unlikely to match oil-rich Alberta’s generous assistance package, he added.
“Will we have a program here? No. That’s strictly provincial. They’ve got money and we don’t,” he said.
“Maybe that will trickle back to us and they’ll want our calves.”
Lee Crowley, manager of Heartland Livestock Services in Swift Current, Sask., said he didn’t expect the Alberta cash to affect the market much. Alberta’s feedlots buy yearlings and won’t start until December, he added.
“You’ll probably see a five cent increase towards the end of November,” he said.
“But it’s not all due to that subsidy. People are holding the cattle back and there’s a lot less calves to pick from.”
Auction marts in northern Saskatchewan and Alberta are running at half the normal level, he said, as prices languish at $100 less than last year and down $200 from the year before.
“The calves are not showing up. They don’t like the prices and they’re holding them back.”
He said sellers should consider themselves lucky if calf volumes stay steady through the fall and average $1 per pound. If a rush to the market happens after Nov. 10, he added, the results could be disastrous.
Buchen said wintering calves is always a gamble. Those who decide to do it might end up giving away their labour and their feed in spring.
The shortage of labour at western feedlots is becoming serious as workers flee to high-paying jobs in the oil patch.
Buchen said the outlook for feeding cattle this winter might become worse. He cited the mortgage crisis and rising oil prices as potential trouble spots for the U.S. economy, which accounts for half of Canada’s annual cattle sales.
“If our dollar goes to $1.20 like some economists think, and oil goes to $150 a barrel, 80 cents for the heifers and 90 cents for the steers might look good. That could happen,” he said.
Although the outlook for the beef industry looks grim because of high feed, fuel and labour costs, the outlook for age-verified heifers might improve as demand increases in the United States, which sold a lot of breeding stock amid a drought last summer.
