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Producers cash out before calf market nosedives

With his calculator at the ready beside him, Pipestone-area rancher Bob Forder watched as the first lot of “good solid” black calves at Heartland Livestock Services’ first fall pre-sort sale came through the ring.

When the bidding stopped at $1.725 per pound for the lot averaging 533 lbs, a fellow in the row in front of him turned around and smiled.

“How do you like that?” he said.

Forder, who runs about 70 cows, quickly did the math — $919 per head.

The sale, which saw roughly 200 yearlings and 700 calves sold followed by butcher cows for total of 1,226 head, was the second Forder had attended this fall. It confirmed that despite a range of negative factors, calf prices are holding up at decent levels for the second year in a row.

“The market is strong right now,” said Forder. “BSE from 2003 to 2009 took the fun out of selling calves,” he said, adding that during the darkest days of the crisis he sold 800-pound heifers for 70 cents per pound.

David Sawatzky, an Oak Lake-area rancher with a 65-head herd, found the prices reassuring. He was afraid that a summer of “dire” economic news threatened to pull the rug out of last year’s prices, which was the first good news after almost a decade of dismal returns.

“Most people are reasonably optimistic, or at least less scared than they were a month ago,” he said. “We can’t deal with just one good year. We need a couple, or three.”

Prices still holding

Cattle might start pouring into the auction ring a few weeks earlier than normal this fall, Sawatzky added, as ranchers seek to cash in while prices are still holding on.

With six cull cows at the sale, he was leery of the impact on prices from the recent delisting by the United States of XL Foods’ slaughter plant at Brooks, Alta.

Post sale, Heartland manager Robin Hill said that the E. coli incident likely played a role in shaving three to five cents off the previous week’s price for an average of 57 to 58 cents/lb.

“But there’s more to it than that. Cull cows always go down in the fall,” he said, adding that trend lower is due to the end of the summer barbecue season and higher volumes of butcher culls going to market.

Greg Alexander, who runs a 130-head mixed grain and cattle operation near Lenore, figured that with his pastures drying up, he’d sell his fall steers a week earlier than he usually does, but background his heifers until the New Year.

Prices seemed to sneaking up, he noted, even with the loonie above par.

“You should be able to make money, but I wouldn’t say you’d make a whole pile. Not with all the input costs like fuel and everything else,” said Alexander. “Prices could have been better if they hadn’t had such a drought down in the states.”

Could be better

Allan Polvi, a rancher from Rocanville, Sask., with 200 head back home, said he was “afraid to look” at the price he was getting for the “leftover” yearlings he kept on grass all summer after selling his best calves last winter.

“Prices aren’t bad, but they could have been so much better if the corn price hadn’t gone up,” he said.

The past summer saw his pastures drowned out in the spring, baked over the summer, and now the weather has turned “brutally dry” with no rain for the past month.

On the upside, the wet spring produced a good hay crop, and he was thinking that buying heifer calves to sell later as replacements might be a good bet against the ever-shrinking North American herd.

Rick Wright, an order buyer for Heartland, said prices were “surprisingly strong.”

Given a slew of negative market fundamentals such as the sputtering economy in the U.S., high corn prices, and the high Canadian dollar, Wright said locking in a guaranteed profit at current prices wouldn’t be possible.

“Cattle feeders are the ultimate gamblers,” he said. “Obviously, more than one person out there today feels that there is room for the finished cattle and the meat to be higher down the road.”

However, any optimism left in the market dissipated Sept. 29 wth the release of USDA data showing corn supplies are even lower than expected. The report sent corn prices soaring and feeder cattle futures limit down.

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