Sometimes it is necessary to focus on the basics of the business, regardless of other distractions or attractions.
Over the past few weeks, I have been watching the cattle markets and have been quite concerned about the pending shortages of feed, both pasture and winter feed (hay or substitutes) in areas where we have competition in the cattle market: the Canadian prairies and the U.S. West and Midwest.
Droughts have created shortages for both winter feed and summer/fall pasture. As a result, there have been a lot of cattle moving to sales. This, however, has not resulted in drastic, if any, reduction in the price producers receive for the different classes of cattle.
Those of us with cattle on open range will be challenged to get our cattle rounded up and sent to market. So, what are the prospects for prices this fall?
High prices for cattle on the hoof may well continue to see a rise at retail stores. Apparently, many cattle producers in Canada and the U.S. are exiting the business which may be good for those who can stay in the business, however, the cattle herd size in the U.S. has grown to the pre-COVID size.
One measure of what prices might be later this fall is to track the futures market which is strong this week for cattle sales into the fall. Producers can pre sell ahead of delivery.
I am not a marketing expert, but my reading of ranch management literature leads me to believe that ability in marketing is important to a successful ranch business. This leads to the comment that you should try to differentiate your product from others if you want a better price, but bear in mind that profitability doesn’t necessarily mean getting the highest prices.
Profitability may well mean those with the lowest cost of producing the “product” are the most profitable. We can influence our cost more than we can influence the market.
All of this is to remind ourselves, and the ultimate purchasers of our product—consumers- that we have tough and complicated business decisions to make.
David Zirnhelt is a rancher and member of the Cariboo Cattlemen’s Association. He is also chair of the Advisory Committee for the Applied Sustainable Ranching Program at TRU.