LACOMBE, Alta. – The hot market for heifers is forcing producers to make tough choices.
Do they sell heifers for record high prices, keep them for their own herd, breed them and sell them next year, put them in the feedlot, or winter them on grass?
“One week we say we’re going to finish them, the next week we change our mind,” said Dan McKinnon of Airdrie, Alta.
He recently asked Canfax cattle market analyst Anne Dunford for advice during a presentation to the Western Stock Growers’ Association annual meeting.
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Dunford said the simple answer is sell and take advantage of the market.
“Prices are outstanding right now.”
But, she added, that’s not taking into account feed supplies and the years people have spent building their herd and shortening their breeding season.
“They’ve put years and years of genetics and time into building the herd. You don’t want to give it all away.”
But if producers keep their heifers, the calves they produce will miss the cattle cycle’s high-price period.
“The party’s over by that time.”
Prices for 500-600 pound heifers have recently been $120-$161 per hundredweight in central Alberta. That’s about $15 per cwt. higher than last year at the same time and $30 more than 1998.
Dunford said there are signs the cattle cycle will soon be into the herd rebuilding stage. For the first time since 1995, Statistics Canada’s cattle inventory report shows heifers being retained for breeding and not for export or sale to feedlots.
There were record heifer sales to feedlots in 1998 and 1999. But as of last month, the number of heifers entering the slaughter mix was down eight percent.
“Those are huge factors,” said Dunford, who searches the numbers for clues about what will happen in the beef business.
“The heifer market is the most important thing for turning the cattle cycle up or down,” she said.
The heifer retention rate shows how quickly the cycle will switch to herd rebuilding.
“How aggressively we keep them back rather than send them to feed is going to tell us a big picture how this cycle turns.”
Long-term planning
Dunford suggested that producers consider the time it will take for a retained heifer to show a financial return.
If they decide to keep their heifer calves, they will be bred in 2001 and calve in 2002. The first money the producer will see from the calves is the fall of 2002 and it won’t become beef supply until 2003.
“Keeping a heifer calf doesn’t give you anything until 2002 in the fall,” she said.
“That’s only the first calf. She produces all her next calves in the low cycle, if our predictions are right.”
Dunford said producers should think about taking advantage of the high heifer prices now. If they need to keep herd numbers high, she suggests buying a heifer bred to calve in the spring.
“Then you got something that’s going to calve this spring and you can sell next fall when we still think there will be good prices. You speed up the whole process.”
Dunford doesn’t expect a lot of people to follow her advice because cattle cycles are created by human nature. People generally expand when prices are good.
“That’s why cattle cycles are highly predictable.”
