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Fall cattle run underway but calf prices discouraging

A late-fall cattle run finally awakened last week as livestock auction markets throughout Manitoba saw significant increases in the number of animals coming to sale.

“This week it’s kind of sprung loose a little bit. There’s been lots of big numbers everywhere,” Scott Anderson, a field representative with Winnipeg Livestock Sales, said Friday.

“For this time of year, it’s probably par for the course.”

About 1,000 cattle went through the Winnipeg ring last Tuesday, followed by another 2,000 on Friday. Ashern sold over 3,000 cattle Wednesday and Virden had over 2,000. Brandon saw over 2,800 cattle last week, compared to roughly 1,600 a week earlier.

“It looks like they’re starting to move,” said Keith Cleaver, manager of Heartland Livestock Sales in Brandon.

Favourable weather helped keep cattle on pasture about two weeks longer than usual. But insecurity about market conditions is seen as the big reason for the delayed run.

Scrambling

The global financial crisis, along with high feed costs, soft market prices, weather problems and trade woes with the United States, make Manitoba’s cattle producers very unsure about their future.

“There’s a lot of uncertainty out there right now, not just with the beef market but with everything,” said Roger Sheldon, a provincial farm production specialist at Ste. Rose du Lac, where heavy summer rains flooded vast expanses of grazing land.

“Most guys have to scramble in order to get feed for this winter and in general the mood is not very upbeat at all.”

Some producers in the flooded Interlake and Westlake regions are having trouble rounding up their herds due to wet conditions. But Sheldon said there’s a lot of grass still out there and it wasn’t a major problem yet.

Calf prices so far this fall are indifferent at best and well below producers’ production costs.

Last week in Winnipeg, 400-to 650-pound heifer calves sold close to 90 cents a pound, with steers fetching around $1 a pound.

“I definitely wouldn’t call it good, that’s for sure,” said Anderson.

At Brandon, 490-to 500-pound heifers last week sold for 90 to 91 cents/lb. Steers ranged upward of $1.12/lb.

That’s well below cost of production, according to Manitoba Agriculture, Food and Rural Initiatives’ recent 2008 COP guide for cattle. Operating costs alone on a 500-pound calf are 89.92 cents/lb. Total costs, including operating, labour and fixed costs, are $1.44.62/lb.

“For the cow-calf guy, there’s not a lot of money in them,” Cleaver said.

But Rick Wright, a buyer with Cattlex Ltd., said prices vary with the calves. He said a load of 500-plus-lb. high-quality calves at Ste. Rose last week brought in over $1.15/lb., the highest Wright has seen so far this fall.

“They’re all over the road. The market this year has become extremely unpredictable. It depends on who wants what at what particular time.”

The plunging Canadian dollar, which sank below US80 cents last week, would normally be good news for prices. But tightening markets for Canadian cattle in the U. S. due to the arrival of country-of-origin labelling (COOL) limit payoffs from the diving loonie.

But Wright said it all depends. Americans, he said, are buying up to 70 per cent of cattle sold in Manitoba. In many cases, they are backgrounding them here because the cost of custom feeding an animal is now less in Canada than it is in the U. S.

“We’re getting some synergies off the American orders that weren’t there at a par dollar.”

Big month

The last week in October is traditionally the biggest marketing week for cattle in Manitoba. Analysts are watching closely to see if numbers will inch even higher as fall progresses. That’s because many financially tapped-out producers are weighing whether to stay in the business or get out.

“We’re going to see massive numbers of beef cows liquidated this fall as guys get out of the business,” Wright predicted.

Sheldon wouldn’t go that far. But he did acknowledge producers are considering their future.

“A lot of guys are going to be sitting down with their creditors and deciding in which direction things are going to head.” [email protected]

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