Clarifying OCM article
I saw your reference to my OCM article and I wanted to clarify a few
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.