whats the "basis"going to be?

[waterloo_boy]

any speculation on what these added procedures for border crossing are going to add to the basis. Old numbers were between 6 and 8 cents pre bse, now factor in higher fuel costs and extra paperwork; whats a fair number?

 

[Big Muddy rancher]

I heard last night that the basis was about 8 cents. If it holds at that it would be great but as things balance out I would look for it to be a little high just with what you mentioned with the fuel and paper work ect.

 

[rkaiser]

Guess we can't factor in any fuel, or tagging, or paperwork at the producer (price taker) level hey! :?

 

[agman]

any speculation on what these added procedures for border crossing are going to add to the basis. Old numbers were between 6 and 8 cents pre bse, now factor in higher fuel costs and extra paperwork; whats a fair number?

The recent events should alter the basis by no more than .8-1.2 cents per pound. Have a great day.

 

[Jason]

Is that US or Canadian currency?

80 cent US fats less 8.5 cents = 71.50 @ 1.27 exchange = 90.805

80 cent US fats @1.27 exchange = 101.60 less 8.5 cents = 93.10

Our fat prices had hit 87 cents here so the upside for price isn't huge, but the capacity is the issue. If we can move all current stock without backing it up at that price will be key for Canadian viability.

I would also think this shows Canadian packers aren't making the huge profits so many claim. I doubt if the $65 is even close now.

 

[agman]

Is that US or Canadian currency?

80 cent US fats less 8.5 cents = 71.50 @ 1.27 exchange = 90.805

80 cent US fats @1.27 exchange = 101.60 less 8.5 cents = 93.10

Our fat prices had hit 87 cents here so the upside for price isn't huge, but the capacity is the issue. If we can move all current stock without backing it up at that price will be key for Canadian viability.

I would also think this shows Canadian packers aren't making the huge profits so many claim. I doubt if the $65 is even close now.

I used U.S dollars. You are correct on the balance of your comments.

 

[rkaiser]

Jason -

I would also think this shows Canadian packers aren't making the huge profits so many claim. I doubt if the $65 is even close now.

[/quote]

Are you going to use a statement like this to prove me wrong Jason. Why not use your calculations to show yourself something when American fats were in the 90's )American) and Canadian fats brought 70 cents (Canadian).

:roll:

 

[Jason]

How long was the spread 90 cent US fats and 70 cent Cdn? Not more than a couple weeks. Also the dollar at that time was closer to par than 1.27. You could only get 1.20 for a while. Besides during that time that 70 cents was offered I know of no one that sold at that price. Some steers sold at 70 cents just when the whole subsidy thing was working through, but US fats were only 80 cents.

Redo the math, 90 US minus 8.5 cent basis = 81.50 x 1.20 = 97.50

so a 27.5 cent spread on a 1250 pound steer that would be a $343.75 advantage IF ALL OTHER COSTS WERE EQUAL.

From reports costs in Canada jumped between $250-$300 per head, so the real advantage was maybe $43. Add that to a US packer profit at that time of $28-40 US and the $65 US figure Agman gave looks pretty close.

I try to deal in present facts. The numbers I posted earlier are accurate currently.

 

[rkaiser]

Good work Jason. You're the Hero! :roll:

 

[blackjack]

...your a funny guy Jason... :???: ...did a quick research of my own on Canfax ....Canadian dollar was 82.49 in 04...today on Canfax the Canadian dollar was trading at 82.12... Alberta slaughter July 23, 04 was over 53,000... July 22,05 was 53,400... may be reading it wrong but the avg. price for fats in July 04 was approx. 70 cents... this week in Alberta fats avg. around 85 cents... by the way Jason feeders were up 27 dollars/ hundredweight over last year...hope the packers were smart enough to save a little for a rainy day... :roll: ...boy it is sure nice to see a little competition back in them prices... :wink:

 

[Jason]

I agree the border has returned a measure of competition to the market. And the big boys have put expansions in that will create more. If a couple independent plants open and survive we will reach capacity that will match our production.

My point all along is what if the packers gave their profit to feeders. Say they limited their margin to $10, good but not outrageous. Give the other $55 to feeders and lets just assume for a second the feeders would pass all of that increase back to producers. 3-4 grand per years production would make all the difference right?

Then what? No expansion, cattle back up prices drop. No expansions back to square 1 waiting for the US border, and completely vulnerable to it closing on some whim again.

The key to survival is information in the present. What happened a year ago, or 2 is no longer of consequence except to learn from it so as not to repeat any mistakes.

Any producers who have struggled have either adapted or will go out of business, but that was true with $1 fats and $4 barley too.

 

[blackjack]

...hey Jason I did my part... I expanded my cow herd by a third because cows were so cheap... does that make a good operator... you make the point we needed more slaughter capacity up here in Canada which most cow-calf people would agree... but from the ranchers I have talked most would have prefered to have seen a government support of a large public packing plant to complete...not for Tyson and Cargill to expand to over 80% of slaughter capacity in Canada... sorely in my eyes the government has pretty well helped set up a system that will put the last spike into the small ranchers heart...

 

[agman]

...hey Jason I did my part... I expanded my cow herd by a third because cows were so cheap... does that make a good operator... you make the point we needed more slaughter capacity up here in Canada which most cow-calf people would agree... but from the ranchers I have talked most would have prefered to have seen a government support of a large public packing plant to complete...not for Tyson and Cargill to expand to over 80% of slaughter capacity in Canada... sorely in my eyes the government has pretty well helped set up a system that will put the last spike into the small ranchers heart...

What government entity do you know that can compete with a private entity? That would just be one more plant the majors would surely own.

 

[waterloo_boy]

Ok guys, I'm a cow/calf producer and I too ended up keeping extra cows due to no market. I still have last year's heifers on grass and they,
as well as this falls run are what I'm looking at. My math needs checking or we still have a ways to go. I take $1.07 US feeders for Aug, .82 cent CDN dollar exchange which yeilds $1.30 CAN ; slide up .04 cents to get 800 lb'ers resulting in a $1.34 steer price. Taking off an .08 cent basis gives you $1.26. Clyde was quoting 800lb steers at $1.17 spot cash, a .09 cent discrepency.
Soooo, are we looking at a .17 cent basis, a market that is still correcting or my lousy math skills?
Just a note, this area NE of Edmonton is supposed to have the highest concentration of cow/calf operations in the province and it seems that given the same set of circumstances most ranchers did exactly the same thing ie., no preg check, held and calved the culls, normal no. of replacement heifers, and are now sitting with an extra 10-15% more calves. October should be an interesting month.

 

[rkaiser]

Agman -

What government entity do you know that can compete with a private entity? That would just be one more plant the majors would surely own.

I think black jack was refering to a plant owned by producers, operated by an existing beef marketing firm (preferably Asian or European, but possibly even American) and bridge finanaced by the governement.

Quick to jump to conclusions about us communists are'nt you Agman. :roll:

 

[Chuckie]

i think jason's proposal sounded way scary. this country (the US) is a capitalist society. it's based on the laws of supply and demand, and those laws are the underpinning not only of our ENTIRE economy, but also (be logical here), therefore, of the beef industry in this country.

now think about the "beef cycle". and keep in mind that this has been disrupted by not only the US/CD border closing, but also by extended periods of drought in some of the main cow/calf ranches in this country.

think about it.

think about a capitalistic economy: those who are most efficient make money. those who aren't, don't. we are all here to make money (or at least a living ). relative to the beef cycle, at some point in time, usually, either the cow/calf producer, the feeder or the packer shows some profitability. i don't think there are too many times in history that all segments of the industry made money at the same time. it goes in cycles.

the answer will never be that packers subsidize feeders. sorry. maybe try the gov't--they subsidize evertything else.

 

[Chuckie]

BTW, in talking to a CD who exports to the US this past week, he figures it'll cost 1 cent/lb (10 cents/cwt), to export fat cattle to the US. i believe he was using US dollars, but i'm not positive.

doesn't seem prohibitive to me, but what do i know? this includes all the dentition, physical description, ear tag confirmation, two vets, sealing the racks, etc, etc.

 

[blackjack]

...you are right rkaiser... most ranchers in Canada want REAL competition in the packing industry...not some side show expansion from the status quo... maybe agman some of us ranchers if we could get our packer loving governments out of the way...we could maybe find some other markets elsewhere around the globe...just a thought... :wink:

 

[Tommy]

chuckie...BTW, in talking to a CD who exports to the US this past week, he figures it'll cost 1 cent/lb (10 cents/cwt), to export fat cattle to the US. i believe he was using US dollars, but i'm not positive.


chuckie did you mean .1 cent/lb? If my math is right 1 cent/lb would equal 100 cents/cwt.

 

[agman]

BTW, in talking to a CD who exports to the US this past week, he figures it'll cost 1 cent/lb (10 cents/cwt), to export fat cattle to the US. i believe he was using US dollars, but i'm not positive.

doesn't seem prohibitive to me, but what do i know? this includes all the dentition, physical description, ear tag confirmation, two vets, sealing the racks, etc, etc.

Your information is accurate except the calculation. It will work out to approximaley $1.00/cwt U.S. added cost.