Cattle Markets Shift From Bear To Bull - Ranchers Set To Benefit
By Robert Thomas
What a difference a year makes,
A year ago ranchers were being squeezed by tight margins and profits - if any - were slim at best.
This year market prices for calves have been rocketing upwards into the stratosphere and with any luck later this fall ranchers are set to cash in.
“There is a fair bit of optimism this year. The markets have improved. They are much stronger this year right across the board compared to a year ago,” Garner Deobald president of the Saskatchewan Stock Growers Association said.
GARNER DEOBALD, PRESIDENT OF THE SASKATCHEWAN STOCK GROWERS ASSOCIATION, SPEAKS AT THE GROUP’S AGM HELD MONDAY AND TUESDAY IN MOOSE JAW - MJ INDEPENDENT PHOTO
Deobald made the comments to MJ Independent during a break in the Association’s AGM. The two day AGM was held Monday and Tuesday at the Moose Jaw Exhibition Grounds.
Improved soil moisture conditions, as well as access to water, has most ranchers looking forward to what is shaping up to be a better year, he said.
“With that and improved conditions as far as water and grass conditions go they are better generally,. There are still pockets of dry here and there where people are still in a drought situation but for the most part we are better off than a year ago.”
“There are a lot of things to be optimistic about. But there are always challenges. It may change from month to month but generally we’re feeling better than a year ago”
Drought and it’s effect on the number of cows in the US is a major factor in the strength in Canadian cattle markets.
A major drought in the midwestern United States and other traditional cattle rearing areas in 2022 and into 2023 had US cattle producers reducing their herd numbers. At the same time consumer demand for beef continues.
“They’re (US cow numbers) down significantly due to the severe drought conditions they’ve gone through for a couple of years now,” Deobald said.
“With that there is a supply and demand issue. The demand has been good for beef, And just the supply of market ready cattle and calves are down enough to bring the market up quite a bit.”
MOST RECENT UNITED STATES DEPARTMENT OF AGRICULTURE MAP SHOWING A SEVERE DROUGHT PERSISTING IN MANY AREAS - MJ INDEPENDENT PHOTO
Deobald pointed out how cow numbers are also down in Canada due to drought conditions that existed here.
Drought has meant there is less hay and feed crop production driving prices for feed to near record levels. The drought has also reduced the amount of grass where cattle pasture putting pressure on Canadian ranchers and cattle producers looking to feed their herds.
Areas such as the southwestern regions of the province have been majorly affected he said.
“You’re seeing the affects of the drought and so cow herds have been reduced in numbers.”
Asked if he worried that the rally in the North American cattle markets is not built upon consumer demand, but a herd reduction due to drought, Deobald said there is also strong consumer demand for beef in Canada and internationally.
“If the demand wasn’t there, even with lower (cattle herd) numbers, the markets wouldn’t have jumped to where they are. Supply and demand still drives it in the end,” he said.
The strong cattle markets have more money coming back to the primary producer but at the same time profitability for ranchers and farmers has not jumped as high as cattle prices.
Deobald said it’s due to the overhead for primary producers having also spiked along with cattle prices.
Consumers might notice food inflation and record prices in the grocery store for many foods, including beef, but ranchers and farmers have also been impacted by inflation and higher costs, he said.
“The production costs are so much higher due to higher fuel prices. Transportation costs are higher. Feed, fertilizer (prices are higher) there are so many of those things yet that are much higher than a year ago.”
“Inflation hits all of us. It’s hit consumers across the board. But on the ag side, the production side, they talk about a 10 or 11 percent inflation rate year over year. ”
Deobald said the costs have risen higher for primary producers especially in such areas as parts, the cost of transportation and the carbon taxing of everything.
“That has just increased the cost of production. It’s limited the profitability somewhat…but we are in a better position than a year ago with money coming through the chain (to producers).”
SEE RELATED - Where’s The Beef???
Support For Farmers and Ranchers
Consumer demand is not the only support ranchers and farmers have received from ordinary non-farming people. It is support much appreciated by producers.
“I think it is something Canadians have been good at. They’ve definitely been we’ll support local.”
Food inflation has impacted what many people are able to afford in the grocery store, he said with some people moving towards other protein sources due to their financial resources.
It’s something ranchers and cattle producers understand and empathize with.
“Especially lower income people they have to be able to afford to feed themselves and so I think they’re fairly price conscious. They have to shop where it makes the most sense for them,” Deobald said.
He said ranchers and farmers appreciated the large outpouring of public support when they questioned who had been profiting in the beef market during record high retail beef prices and primary producers were financially suffering.
Potential Impact Of Pork’s Market Problems
Alternative sources of protein, such as pork and chicken continue to be a major competitor for consumer dollars at the grocery store.
China’s rebuilding of their pork herd is also having an effect on meat prices in Canadian grocery stores,
China has rebuilt their hog numbers to the point where they have adopted a policy of relying upon domestic production and shutting out foreign imports the AGM was told during one of their information sessions.
There was talk about a potential fire sale of pork in the early fall, and it’s effect upon grocery store prices and consumer demand away from beef,
“Pork is really taking it. They really are in a tough situation right now. Again a lot of that is due to feed prices and the overall cost of production being so high. There is fall out because of that there have been some operations that have shut in for the time being,” Deobald said.
Despite the shutting in of pork production and the potential of “fire sale pricing” of hogs into the market there is still optimism for Canadian ranchers and cattle producers.
The AGM was told the impact of any quick sale of pork has yet to be determined.
“On the beef side I guess we are fortunate in that way. We are enjoying some better markets right now and that can change overnight,” Deobald said.
During a session, discussing price insurance offered by the government’s Crop Insurance Corporation ranchers, feedlot operators and order buyers expressed confidence in a continued strong cattle market.
But the feelings about the cattle market being strong, were tempered with other concerns about the potential of the market going sour.
One participant commented that even purchasing the lowest market price guarantee product that ranchers and cattle producers would be able to walk in insurance guaranteeing a higher price than they received for last year’s calves.
The deadline to purchase insurance is this Thursday.
Weather Also A Looming Threat
Despite the optimism like their American counterparts Saskatchewan’s ranchers and cattle producers still face weather concerns.
Hot temperatures and little or no rains could mean a reduced amount or lack of grass to pasture beef on as well as higher feed grain costs impacting overall producer profitability.
He said there is hope improved soil moisture conditions will mean lower prices for forage and feed prices for the industry.
“We are so dependent upon what the weather does and it’s something for sure we’re looking ahead to the fall. I don’t think there’s anyone with more of an optimistic outlook than a cattle rancher. You have to be.”