Beef producers headed for easy street

(To be honest, sometimes I throw out a tiny misleading headline like that, just to catch people’s attention.)

The point is, I just read Jerry Klassen’s beef market column which will be appearing in the early October issue of Grainews, (apparently I have to read it, that is part of my job), but aside from being a generally more positive outlook on the beef market ahead, I am always surprised by the various factors that affect the price of beef (or any ag commodity, for that matter).

And I should know this stuff. Over the years I have sat through (dozed through) dozens of market outlook presentations. Jerry sends his column in by email, but if he was speaking to a crowd, like other market analysts, he would probably have a nice power point presentation, with many graphs and charts that would show how a particular influence on the market has trended since Christ as a baby. And sometimes these analysts have charts with more numbers on them than a Los Vegas bookie sheet, and it is all supposed to mean something. (I always get a kick out of it too, when the presenter throws up one of these bzillion number slides and says ‘you probably can’t see this in the back’ – no kidding, you can’t read it if your anywhere past the third row – but that is another comment for another day).

Back to my point about Klassen’s column - yes the world recession had a big impact on the beef industry in Canada, but often I don’t think about the details. The news is all about world banks and multinational corporations folding and billions and trillions spent on bailouts – all this big scale stuff.

But fact is, the price that Bob Rancher gets for a fall calf at the auction mart in Assiniboia, Sask., for example, so much depends on whether Joe Blow in the US has a job or doesn’t. If he doesn’t have a job, he and the family likely stay home and open a can of tuna for dinner. If he keeps or finds a lower income job they may eat once in a while at McDonalds, and if it is a little better job they might go to The Keg. It is all those individual buying or eating habits that ultimately affect the price of beef here. And I don’t often stop to think about that.

Klassen describes a bit of the increasing beef consumption due to reduced unemployment rates. There is a five per cent increase in the spending on away-from-home food – more eating out - and restaurant receipts are up too just because summer holidays are over and more business people are traveling again. A bunch of little things that burger by burger, or steak by steak make a difference to this North American market.

I've read too, for the mustard growers in Canada (and maybe the beef producers too), if the economy is in a slump, fewer people go to baseball and football games, so they eat fewer hotdogs with mustard.

With higher unemployment, fewer people buy new cars, and that impacts the amount and value of beef hides needed to make leather seats. If the packer is getting less money for hides, that’s less money paid back through the system to the producer.

North American beef production continues to contract with no sign of expansion, and there are all these little signals about increasing beef consumption, so overall that bodes well for prices. One reference Jerry made, which was a bit surprising, concerned expected increases in feed grain prices. I thought with all this late, wet fall there might be all kinds of cheaper feed grains, but maybe not, and maybe Canada isn’t a big enough producer to make a difference. Of course, I often figure, too, if it is raining on my street it is raining everywhere in the world, and that isn’t always the case. I will have to keep reading Jerry’s column to see how this plays out. It is just like a soap opera.

In the meantime I think the message for all true Canadians is keep your job, eat more at The Keg, go to sports events and have a hot dog, and buy a car with leather seats. It is the least I/we can do for Bob Rancher at Assiniboia.

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