Another year of favourable prices expected for cow-calf operations, but U.S. labelling law remains a problem
After weeks of warm, wet weather that kept pastures green well into October and swaths lying in the field, a flood of calves is set to hit the market.
“The fall run is here now. It took a little time to get started,” said Robyn Hill, manager of Heartland Livestock Services in Virden.
Volumes in recent weeks were unusually low for this time of year, but last week’s pre-sort sale saw about 2,800 head go through the ring.
Dwight Jorgensen, a young rancher from Redvers, Sask., was in the bleachers as 94 of his calves sold for good prices.
After bucking the trend by building up his herd during the BSE years and finally saying goodbye to the oilpatch after seven years on the rigs, he was looking forward to ranching full time with 135 cows.
“I’d like to get bigger in the future, but we’ll have to see how much help we get from the next row,” he said, gesturing at the order buyers up front.
Prices were “a lot better” than last year, noted Dale Easton, president of the Saskatchewan Angus Association.
“There’s some optimism for sure. The shortage of cattle numbers is finally catching up,” said the rancher from Wawota, Sask., who had 35 head of cull calves from his purebred operation up for sale.
Higher prices haven’t translated into increased demand and higher prices for bred heifers, said Easton, adding he expects that it may take a few more profitable years before the Canadian herd starts to grow again.
“The younger guys just aren’t ready to step in, and the older guys are still selling out,” he said.
Further back in the bleachers was Lee Strubel, also from Wawota. He was looking to buy about 600 red and black Angus calves at around 500 pounds to background on screening pellets and then grass next summer before selling them to Alberta feedlots.
He used to fatten them and sell them back through the ring in Virden, but stopped during BSE because with a smaller pool of buyers, it was getting “too risky.”
“Prices are good,” he said, noting that the red calves in his target weight were going for about $880, up roughly $80 more than last year.
Strubel was wary that beef prices might be getting too high, and pushing consumers towards cheaper alternatives such as chicken and pork.
“You have to remember that Mrs. Housewife has to buy this meat and she’ll only pay so much for hamburger, steaks and roasts,” said Strubel.
Washington’s debt ceiling debate and the federal government shutdown was weighing on his nerves due to the risk of a border closure or a stock market crash.
“If the stock market crashes, it affects everything,” he said. “Hopefully, those idiots get it together.”
But with feeder cattle futures on the Chicago Mercantile Exchange soaring, some say Canadian prices should be even higher than they are.
“I think it’s fair to say that the discount is larger than normal,” said Ray Bittner, cattle market specialist for Manitoba Agriculture, Food and Rural Initiatives based in Ashern.
He was reluctant to pinpoint the reason, other than possible “trepidation” related to country-of-origin labelling rules.
The latest revision to COOL rules in the U.S. is knocking five cents per pound off the slaughter price for Canadian fat cattle — even for those fed south of the border, said Doug Richardson, a cattle buyer from Moosomin, Sask.
“That makes a big difference to the feeder cattle market,” he said. “We’re talking $50 to $60 per head. On a 500-pound calf, that’s 10 cents a pound.”
Having to segregate Canadian cattle and clean their facilities ahead of killing on separate days means many packers have bowed out of the market for non-U.S.-born cattle, and those that continue to handle them have “arbitrarily” set a discount on Canadian cattle of five cents per pound dressed weight.
“Two or three months down the road, they could say we’re going to take 10 cents off,” said Richardson. “We don’t know where we stand. That’s the whole problem.”
If the uncertainty surrounding COOL legislation were to be resolved somehow, feeder cattle on the Canadian side would jump in price, he said.
As less and less cattle are shipped south, the problem is getting worse because large-scale packers that kill as many as 4,000 head per day are having problems sourcing enough animals to make a separate run worthwhile, he added.