By Dori Modney (@Dori_Modney on Twitter)

Cattle industry in ‘holding’ pattern watching signals from the U.S.

Feb 21, 2017 | 6:43 AM

Agriculture Canada has issued a positive economic forecast for the industry.

While net cash income is expected to post a slight dip, income will still be higher than the past five-year average. However, a slight weakness noted in the Feb. 17 report is blamed on North American livestock markets

Local cattleman Bob Balog says the first few weeks of January started out on a note of optimism, as feeder cattle were strong, and the American market was moving in the right direction and finished cattle were selling at a strong level.

Unfortunately, Balog noted late January and the early part of this month brought a lot of hesitation to the cattle market.

“Finished cattle have come down a little bit in price,” Balog said in an interview. “The American market has not taken off the way we would like to see it take off, and the Americans are a big part of our industry, so what happens there usually ends up happening here. We also see the future being a little bit blurred, because there will be a lot of fat cattle all finished at the same time.”

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At this point in time, Balog says the futures have gone the wrong way and our dollar has gone up which is not an asset to people trying to sell livestock to the U.S. 

“It leaves the cattle industry in a state of limbo, particularly as Canadian ranchers wonder where the Free Trade deal will end up,” he explained. “Is President Trump going to do something? We think not and we pray not, but it’s always there.”

Balog remains optimistic but concedes there are a few elements that are making some producers a bit hesitant. They include not being able to contract their cattle as strong as they were a month ago, and not knowing where US tariffs might come in, which leaves some producers in a wait-and-see mode.

“But, the cattle are still moving,” he added, “so that means the feeder cattle are not as strong because lots of people are getting ready to come to town; calving time is going to be upon us so a lot of the backgrounded cattle are going to come to town in the next 45 to 50 days”.

When it comes to the U.S. approach to Canada under the new president, Balog says the cattle industry is hoping common sense will prevail.

“I think we need realistic,common-sense people who know what’s going to be making the deals, putting two and two together and saying we are extremely important to each other — we have been, and we will continue to be. So if you want to be a deal maker, let’s make a deal. I don’t think anyone in this country is asking for free trade; all we’re asking for is fair trade.”

As far as to the attitude south of the border, Balog feels there is more optimism than there is negativity.

“I think that the heartland of America, who are very supportive of the administration that’s there now, are pleased with the nomination for the secretary of Agriculture and they feel that he has a common-sense approach. We pray that he does also, and right now, I think the optimism in the States is two to one, compared to us being not being negative but, being hesitant.”

For that reason, Balog says the industry is in a holding pattern.

“I think if the prices where to stay where they are today, that all segments of the industry would not be overjoyed but they would be, for sake of a better word, satisfied – if we continue to drop our markets or if we have some kind of turmoil between the two countries, that would not be very good but, for today, we’re going to keep going as we are, all systems go.”