Clarifying OCM article
I saw your reference to my OCM article and I wanted to clarify a few things.
First, you mentioned that fed cattle prices usually make a big break by August. That is basically true and that was the whole point of my article. With the Canadian border being closed, prices have been much better than normal and we didn’t see the big break in prices in the summer. When the border is opened, fundamentals will return to normal and you had better be prepared for a break in the market.
August live cattle have only been over $80 when the Canadian border has been closed and the 10-year average of contract lows in the August live cattle is $62.28. That seemed rather ominous to me when I wrote the article and August futures were between $80-$81.
To quote myself exactly from my article to the OCM “Looking back at August live cattle prior to closing the Canadian border, things aren’t pretty. In 2003 the contract low was $65.40 and the market never broke $72 until the border was closed. In 2002 the contract high was only $75.20 and the low was $59.75. Currently the August live cattle are between $80-$81. By the time we get to August, the fundamentals of the cattle market will be similar to 2002 and 2003 so you can’t tell me that a $5-$10 break isn’t likely. You also can’t tell me that a $20 break isn’t possible. Remember, we had the Asian export market then and the mid to lower $70’s proved to be good resistance to the market.”
You also mentioned that the reputable economists that you spoke to thought that a $60 per head negative impact would be about the most we would see. I hope they are right, but I think that they are a bit optimistic. You could make the case that we are already seeing a $60 per head loss just in anticipation of the border opening, because last year in SW Kansas cash cattle averaged about $84 in August and right now August futures are at $79. That is a $5/cwt difference, which is $60 per 1,200 lb. animal.
Lastly, regarding the “awful good” feeder cattle market in Canada, 700-800 lb. feeder cattle in southern Alberta last week averaged $85.52. Compare that to similar Montana feeder cattle bringing $95-$107. Fed steers in Alberta brought $73.38 compared to $86.75, which was the U.S. average. (These prices are all in U.S. dollars, so there is no conversion to calculate.) There may not be holding pens of Canadian cattle aimed at the U.S., and the process of getting them to the U.S. may be slow at first, but there is an undeniable economic incentive to move cattle south of the border.
Schwieterman Marketing, LLC
Garden City, KS
Impossible to build dams
I would like to comment on an article that appeared in your Feb. 14, issue, “Water Scarcity Looms.”
We have made it almost impossible to build reservoirs and dams along our rivers and streams to capture and store or slow down flows. Instead, we allow this “diminishing fresh water” supply to run out to sea for reasons I fail to either understand or agree with.
The solutions are out there.
NCBA, WLJ misinformation
It seems rather odd you didn’t admit all the mis-information you and NCBA. have been passing on to those of us who are producers that the producers and feeders were running NCBA. You had Steven Vetter write the comments stating “the cow calf producers and feeders finally had their concerns heard and addressed through the policy making process at the NCBA convention.” It has been a flip flop process and it shows a few controlled NCBA and not for the best interest of producers and feeders.
If NCBA had been using their present policy about opening the Canadian border from the beginning things would be a lot different. While I was on the Beef Checkoff Board, I was part of the foreign trade committee for one year and we spent a lot of time with Phil Sing, of the Meat Export Federation. It has always been a tough battle dealing with Japan and if we wait until we have a full export market with Japan before we open the Canadian border it will be a long time.
Pete, you have stated opening the Canadian border to cow beef from Canada wouldn’t be as bad as the dairy buyout. The dairy buyout was short lived if Canada is allowed to send 250,000 cows to the U.S. for processing or if the cows are processed in Canada and the meat is sent here it will have a very negative effect on our cull cow market. Not only that, consumer groups could challenge cow beef in the U.S. from Canada and ruin our domestic market.
COOL could be quite simple, as choice beef if is already separated from select. Schools, the military and McDonald’s use domestic beef so it could be easily labeled.
You recently stated that Canada needs more time to study the blue tongue and anaplasmosis issue. How much time do they need? I was on a Foreign Trade Committee for WCA over 20 years ago, and they have and are still using these issues as trade barriers.
I have been president of the Washington Cattlemen’s Association, a director for WCA, and spent six years on the Beef Checkoff Board.
I sold more memberships to WCA in 1979 than anyone else in the United States. I canceled my membership to NCBA last year after a membership that extended for over 35 years. If I am convinced feeders and producers are running it I will join again. In the mean time Pete you and NCBA will have to eat crow.