From FCC Express, by Neil Billinger
The Canadian beef herd continues to shrink as prices reach record levels.
Statistics Canada says there are one per cent fewer beef cows on farm this summer compared to a year ago. The number of beef heifers retained for breeding was down 3.5 per cent.
Sandy Russell, an analyst with Spring Creek Land & Cattle Consulting in Outlook, Sask., says it’s a case of demographics trumping economics. A large number of cattle producers are in their 50s or 60s. They view this as an ideal time to downsize or exit the business.
“For those who stuck it through some of the very hard times in the cattle business over the past decade or more, they are saying it is time to sell at a record high price,” Russell says. “It is a very good business move for them.”
Younger producers are expanding herds, but not enough to make up the difference. Russell says average herd size is going to be larger in the future.
“Where we used to have a mixed operation 20 years ago, now it’s a beef operation,” Russell says. “Producers are much more focussed in their business models and that means larger herds across a lot of Western Canada.”
Current feeder cattle bids put some attractive numbers into business plans, she notes. Feeder and fat cattle prices — typically quiet over the summer months — reached record highs over the summer as North American consumers kept on eating steak and hamburger.
Canfax reports prices for Saskatchewan feeder steers over 500 pounds increased between $26 and $32 per hundredweight between June and mid-August. A number of producers are forward contracting their cattle for fall delivery in order to lock in prices.
The general consensus is that the market will cool off during the fall calf run, says Russell, adding that “it’s important to keep any price declines in context, because the market has hit record high levels.”