Demands around the world to restrict greenhouse gas and nutrient emissions from all forms of livestock mean feed formulators need to ensure that animals are efficiently pulling all they can out of both macro and micro-nutrients to reduce the amount of harmful substances that end up in the air, water and soil.

“They look at livestock and see pollution,” said Melissa Dumont, executive director of the Animal Nutrition Association of Canada, summing up widely held public and government attitudes toward agriculture.

Those attitudes result in both scrutiny of and demands upon the feed industry that are relentless and sometimes wrongheaded, some researchers and scientists said.

“The pressure on us … is absolutely immense,” said British feed scientist Emily Burton of Nottingham Trent University.

“It’s the assumptions that annoy me most as a nutritionist.”

Within the livestock and feed industries there is much pride over the ever-increasing efficiency of meat production, with per-kilogram greenhouse gas emissions and environmental impact significantly falling over time.

For example, the U.S. hog industry claims it now has an eight per cent smaller environmental impact, uses 75 per cent less land, consumes 25 per cent less water and runs on seven per cent less energy than 50 years ago, despite producing much more meat.

Each healthy pig or steer today now produces more pounds of gain with fewer emissions than ever before, while preserving grasslands and consuming materials that would otherwise be waste.

However, millions of people around the planet believe livestock production is a primary cause of climate change, water pollution and soil degradation.

While some have pushed back against what they consider misperceptions of net livestock emissions, virtually all feed companies and researchers now include “sustainability” as a key metric when considering advances and characteristics they are trying to build into feed sources and practices.

Before the official opening of the main ANCC sessions, a full morning was dedicated to researchers who are focused on boosting livestock sustainability with better feeding.

Getting to “net-zero livestock production” and turning pledges into concrete sustainability results for pig and dairy cattle producers were the lead-off sessions for the symposium, which drew more than 400 attendees.

American and Dutch experts challenged the feed industry to take more seriously micro-nutrient impact, efficiency and waste, which they said is generally ignored.

“Most of us don’t (pay attention to micronutrient impacts),” said Terry Engle of Colorado State University.

There’s great stress on researchers to improve livestock sustainability, but fortunately for the industry, it appears there is a stream of young researchers keen to get into the industry. Dozens of graduate students from across Canada, many from non-Canadian backgrounds, attended the conference.

The student researcher presentations, both in posters and from the stage, were popular with more seasoned researchers, and the conference sprinkled student participation through the event.

One organization making its appearance at the conference was African Youth in Canadian Agriculture, which is a new national organization attempting to connect African students in Canadian high schools and universities to opportunities in agriculture, which most young urban people are unaware of and have no clue of how to access.

An example of how African-origin researchers are finding places in Canada’s feed industry was seen in University of Saskatchewan graduate student and researcher Roseline Ogory, who presented her work in incorporating Ahliflower seed and cake in chicken diets to produce better omega 3 content in eggs.

The notion that there are still radical gains to be made in livestock feeding efficiency ran through the conference. Micronutrients are not the only element of livestock feeding that is likely being supplied inefficiently and possibly counterproductively. University of Saskatchewan swine nutrition scientist Dan Columbus highlighted the relative lack of study on sow nutritional needs and the crude manner in which sow diets are supplied, mostly ignoring the cyclical needs of the animal.

Engle, an expert in copper, acknowledged his favourite element befuddles him, despite decades of study.

“I love copper, but it confuses me,” said Engle.

Researchers feel much pressure to feed animals more sustainably, but many also feel optimism that feeding sustainability and efficiency have major gains waiting to be discovered.

That tension between demands for sustainability and optimism about sustainability dominated the conference.

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“We have been patient and proposed solutions to safeguard the interests of Canadian farmers and ranchers, yet our concerns remain unaddressed,” said CPC chair Rene Roy in a news release today.

“Setting a precedent for non-tariff trade barriers within the CPTPP must be avoided to protect our industry,” he said.

The CPC said it was joining the “Say No to a Bad Deal” coalition, a group composed of the Canadian Cattle Association, the Canadian Meat Coalition and the National Cattle Feeders’ Association.

The CPC said this move comes in response to “Great Britain’s stance toward Canada,” which it says shows the U.K. “is not interested in free and fair trade in agricultural products.”

Late this January, the Canadian government announced Britain had suspended talks on a free trade deal with Canada amid discontent on both sides about the lack of access to agricultural markets.

The talks – which are separate from the CPTPP – are among a number of negotiations Britain has launched around the world in the wake of its decision to leave the European Union, which excluded it from existing EU free trade deals.

Canada and other nations welcomed Britain into the CPTPP in July. In response, the Canadian Meat Council (CMA), the Canadian Cattle Association (CCA) and the Canadian Pork Council issued a joint statement “strongly opposing” the move.

“The U.K. does not accept Canada’s food safety and animal health systems and measures, and those non-tariff barriers limit our access to the U.K. market,” the three groups said.

In a January news release, the Canadian Cattle Association said, “The UK currently has unlimited access for British beef exports to Canada while Canadian beef producers are unable to export into the UK market.”

The CPC said it aims to remind the Government of Canada of its responsibility to prioritize the best interests of Canadian farmers and ranchers.

“Great Britain’s refusal to truly engage Canada in the current negotiations poses significant risks to Canada’s agricultural sector, and it is crucial we address these concerns head-on before the UK joins a trade deal of which we are a founding member,” Roy said.

The CPC said it “supports fair trade terms that uphold the principles of reciprocity and mutual benefit.”

“Canadian pork producers rely heavily on international markets for their livelihoods, with 70 per cent of production destined for export markets,” Roy said. “Fair trade agreements provide producers with the opportunity to access new markets, diversify their customer base and increase profitability.”

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Republican U.S. Senators Mike Rounds of South Dakota and Charles Grassley of Iowa and Democratic Senator Jon Tester of Montana have proposed legislation to create an office for a special investigator within the U.S. Department of Agriculture.

U.S. lawmakers and USDA are seeking to address concentration in the beef processing industry in the aftermath of a ransomware attack against meatpacker JBS that disrupted U.S. meat production and disruptions caused by the COVID-19 pandemic.

The proposed office would have a team of investigators, with subpoena power, dedicated to preventing and addressing anticompetitive practices and enforcing antitrust laws in meatpacking, according to a statement from the senators.

“I think it’s a good proposal,” Vilsack said at a congressional budget hearing. “I think it’s part of what needs to be done.”

Four companies including JBS in 2018 slaughtered about 85 per cent of U.S. grain-fattened cattle that are made into steaks, beef roasts and other cuts of meat for consumers, according to USDA.

USDA has separately said it plans to strengthen its enforcement of a 100-year-old federal law intended to protect farmers and ranchers from unfair trade practices. The agency also said it will support increased processing capacity as part of a US$4 billion initiative to strengthen the country’s food system.

— Reporting for Reuters by Tom Polansek in Chicago.

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“Unlike previous disease outbreak issues, COVID-19 has not been about food safety or consumer confidence or issues with food products,” Canada Beef president Michael Young said during a recent online town hall.

“Beef demand at retail is up 50 to 70 per cent. Consumers have aggressively stocked up on groceries for home.”

Ground beef is in especially high demand, and many grocers have limited the number of packages that can be purchased at one time.

“It’s too early to know what the impact of COVID-19 will be on retail food prices,” said Young. “What we do know is that the food supply chain is working very hard to keep shelves full.

“Current prices are a reflection of a supply and demand situation, as consumers have been stocking up on food and supplies. This is expected to be short-term as the supply chain will adjust to meet demand and the case of retail purchases normalizes.”

People are also busy searching for recipes and cooking information — with Canada Beef’s website seeing a surge in visitors.

“Canadabeef.ca has seen an increase of 66 per cent total users in March, while Thinkbeef.ca had a 450 per cent increase in visits from February to March,” said Young.

A fact sheet on what the Canadian meat industry has done to protect against COVID-19 has been widely distributed here and abroad, he added.

Most of Canada’s key export markets have been experiencing similar conditions as here, with strong retail demand.

“Many of the markets are making do with dwindling supplies of imported food products, due to the impact of COVID-19 on labour availability at port facilities and transportation,” said Young.

— Alexis Kienlen reports for Alberta Farmer from Edmonton.

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Get serious about trade

There are obviously several paths available when discussing the future. The one I envision includes trade. Given the size of the Canadian population, if we do not engage in trade, then we need to dramatically downsize our cow herd. Personally, I favour smart trade. I would envision a target of less than 50 per cent of our exports going to the U.S. If we look at our Canadian resources, relative to our population demographics, then I think we need to be active traders. If we were to expand the cow herd to seven million, then we could meet all of our current commitments to U.S. customers and still hit our 50 per cent target.

That said, I am not so naïve as to believe that beef won’t flow to the either the highest value or easiest market, so trade increase will require some serious effort. I think our trade policy needs to be astute, aggressive and non-apologetic. This rubs many the wrong way, as it is almost “non-Canadian.” I lean a little bit to the side of making commitments and then meeting them (in that order).

There is no better way to learn how to swim than to dive right in. We will continue (I hope) to see live cattle trade with the U.S. and this is an important component of the industry. It also provides needed processing capacity and may provide potential for Canadians to participate in already-developed or developing markets more quickly than may be accessible with a strictly Canadian approach. In other words, just because the cattle are processed or sold in the U.S. does not mean a Canadian operation cannot have a clear stake in the end product.

Regulation

This is a big one, and we are starting to see real obvious impacts from regulation that we can’t ignore. The best recent example is the new antibiotic regulations for livestock and the need to a veterinary-client relationship.

Regulatory inefficiency is currently very damaging to the Canadian industry, although I might argue that the intent in most cases is not all bad. We do need to regulate antibiotic use for example, however we also require clear, concise regulations with a consistent application. Regulatory approval for new processors has also represented a real bottleneck for the industry over the last 15 years (I know as I lost a lot of money learning this lesson). The same is true for new livestock products and feed labels. Regulations need to be outcome-based, but compliance should allow for creativity and demonstrable achievement. In other words, we want to regulate the outcome but not the process to achieve it. If a specific process results in meeting the desired outcome in a safe/humane fashion and is scientifically valid it could/would receive approval.

In this vision the CFIA and Health Canada would have some synergy, reduced overlap and a clear mandate and accountability structure. This could result in clear criteria for new ventures such as veterinary drug approval or packing plant development.

Additionally, in my regulatory wish list would be clear boundaries between provincial and federal jurisdictions and parity of provincial regulations across the country. For example, I know that I have eaten beef from provincially inspected plants across much of Canada and have felt safe doing so. It should not be unreasonable to expect that same beef could trade across provincial lines and that food safety regulations could be harmonized. The same applies to environmental regulations, with some leeway for specific local conditions and issues such as rainfall levels. The outcomes and processes to licence a new intensive livestock operation should be similar/logical across provinces, with some regional common sense.

Risk management

Let’s face it, a lot of the risk management tools available to cow folks are poor in comparison to our grain-producing neighbours, but they don’t need to be. WLPIP has been a great start and addition to managing market risk, but there are a lot of other production risks that are not covered. The truth is that in a systems approach, cows are actually a very good risk management tool as they can thrive in many environments and add value to poor-quality feeds. My vision here would be that the cow/forage programs and the grain programs would have some synergy. For example, if a grain producer were hailed out, they would be given a much more immediate option to salvage a crop for feed, rather than being forced into combining a crop with limited economic value. I would also envision forage programs with flexibility to graze and with higher payout values available for forage crops. If we are able to double forage production through management, then surely the insured value should be able to be increased.

Part of risk management is traceability and although we have a good traceability system in place, I would envision it being much more automated/streamlined and also contain a DNA component so that there could be traceback right from the end product on the plate. This traceability could also be of great value to the genetic selection and management efforts of the industry moving forward.

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Looking forward, April live cattle futures appear to be incorporating a risk premium due to the uncertainty in 2018 first-quarter beef production. Therefore, feeder cattle prices have also ratcheted higher over the past month. In central Alberta, larger-frame medium- to lower-flesh black steers at 925 pounds traded for $193. Calves averaging 525 pounds have traded as high as $245 while 350- to 400-pound calves have reached the magic $300 level.

Feedlots have bid up the feeder market so that there is very little margin in the deferred positions, which is a characteristic of a true competitive market. I’ve received many calls from cow-calf producers in regards to a placing a position on the livestock insurance program. Buying the insurance too early can be costly and you don’t want your risk management program to consume all profits. I’ll briefly review the market structure with some ideas on buying price insurance.

U.S. numbers

The USDA lowered its 2017 third- and fourth-quarter beef production estimates on their October WASDE report. Marginal declines were also noted in the first and second quarters of 2018. The weekly slaughter is coming in lower than anticipated and carcass weights continue to come in below year-ago levels. Earlier in September, the market was factoring a worst-case scenario for beef production. However, now that production is lower than anticipated, the market has room to breath and move higher. The main point is the market is not getting more bearish but rather looking neutral to bullish.

During 2016, wholesale beef prices made seasonal lows in November then started to strengthen in January. This fall, the seasonal lows were likely made in late September. Weekly data points that wholesale prices are now starting to trade sideways. Choice product has actually improved but Select product is about the same price as last month. Again, the main point is that prices are not deteriorating but stabilizing. This is another reason not to be bearish on the market.

From a demand perspective, there are factors that will influence the market over the next four to six months. November and December are periods of seasonally strong demand given the holiday season. As well, the U.S. economy is running full steam and continues to improve.

The price insurance program is based off the options for live and feeder cattle futures. Producers often have little idea of what the “smart money” is doing in the futures market. For this information, we have to look at the Commitment of Traders report, which comes out every Friday afternoon and shows the data as of close the previous Tuesday. The report shows how the combined position of commercials (packers, large feedlots, merchants), the managed money (large speculator) and non-commercials (small speculator).

With Live Cattle Futures the net long position declined from June 12 through to Sept. 4, reflecting that these players were net sellers. From Sept. 12 forward, the net managed money position increased, reflecting that they have been net buyers. In mid-September, there was a week that the commercials and the managed money were both net buyers. This is a signal the market is turning and you don’t want to stand in front of a freight train, never mind buy price insurance.

The fundamentals warrant firmer prices into the early winter period. Producers need to watch the Commitment of Traders report so that they have a good idea when to buy their price insurance.

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U.S. cattle-on-feed numbers reached a historical high on June; placements have sharply exceeded year-ago levels over the past three months. Large feedlot inventories have confirmed that beef production will reach burdensome levels in the third quarter.

Wholesale beef prices have also dropped from the May highs with the larger beef production coming on stream. Beef demand has been bolstered by a strong overall economy. Robust consumer spending has enhanced beef consumption.

Feedlot inventories are at 10-year highs. Earlier in spring, carcass weights were declining. The live cattle futures were trading at sharp discount to the cash, causing feedlots to be extremely aggressive on marketings. This caused beef production to come in lower than anticipated in the second quarter. We’ve now seen the tide turn. Marketing weights are increasing but one positive aspect is that feeding margins remain favourable. Despite the lower prices, producers continue to be aggressive on sales and feedlots remain current with production.

Canadian numbers

Cattle on feed in Alberta and Saskatchewan as of June 1 were 881,445 head, up five per cent from June 1 of 2016. Placements during May were 121,548 head, up a whopping 165 per cent from last year. Most of the placements were under 800 pounds so the bulk of these placements will come on the market in the fourth quarter.

Looking forward, the surge in U.S. third-quarter beef production will have two major implications for the Canadian market. First, exports to the U.S. of slaughter steers and heifers will drop to a trickle. Secondly, exports of wholesale beef will also slow down. This means that additional beef supplies will have to be absorbed in the Canadian domestic market or priced into other offshore destinations. Alberta fed cattle basis levels will likely deteriorate in the latter half of 2017. I’m somewhat bearish on the fed cattle market into the third and fourth quarters. The price outlook is shaping up to be similar to 2015.

Western Canadian feedlot margins have ranged from $200 to $300 per head in June. Feedlot operators bid up the price of feeder cattle until margins are at break-even and it now looks like margins in the fourth quarter will drop into negative territory. Feeder cattle prices are expected to trade sideways through the summer and fall. However, the market will likely trend lower in November and December. Cow-calf producers will want to be aggressive with their fall marketings. Sell earlier rather than later.

Western Canadian barley prices are expected to strengthen by $30/mt to $40/mt next winter, which will add about $50 to $60 per head of input costs. Feedlots will calculate their feeder purchase accordingly.

We’ve seen a very unique market structure in the first half of 2017. Basis levels for fed and feeder cattle have been abnormally strong for an extended period. This will not continue because feedlot inventories are too high. Readers who recall my articles from last winter know that producers want to sell a strong basis. I want to remind producers that weekly updates on the feeder cattle market can be found every Tuesday on the agcanada.com website. I enjoy the feedback and phone calls, but visiting the website may be helpful for short term marketing decisions.

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Carcass weights were declining and feedlots were moving a fair amount of green cattle in order to capture high fed cattle prices and historically large feeding margins. During the weekend of April 29, a severe snowstorm in Kansas and excessive moisture across much of the Midwest caused many feedlots to hold off on sales as off farm logistics became a nightmare in many counties. Packers scrambled to cover their nearby requirements with U.S. companies shopping aggressively for market-ready supplies across the Prairies and in Ontario.

However, Canadian operators were in the same shape as our southern neighbours with feedlots moving cattle out of feedyards just over 1,150 pounds in some cases. As luck would have it, the Canadian dollar also dipped to 13-month lows, enhancing the overall price structure.

Wholesale prices surged and remain at relatively lofty levels as of late May. Feeder cattle prices in the 800-pound plus categories jumped nearly $40 within a two-week period. As of mid-May, the fed cattle market has fallen back to the $185 area while 850-pound steers have held value trading in the range of $205 to $210 in southern Alberta.

The U.S. numbers

The USDA continues to project a year-over-year production increase of 300 million for the second and third quarters of 2017. However, it is important to note that cattle-on-feed numbers were running very similar to year-ago levels on the April report. More importantly, weekly beef production is actually only coming in marginally higher than last year given the lower marketing weights.

We’re bound to see an increase in production but given recent data the current estimate may be somewhat overstated for the second quarter. By the third quarter, we should see marketing weights increase and the weekly slaughter run about 20,000 head above last year. I’m in agreement with the USDA on the third quarter.

In Canada, the weekly slaughter is running about 55,000 head per week, up from 49,000 head per week last year. Year-to-date beef production for the week ending May 6 was 347,534 mt, up about two per cent from last year but the number of cattle slaughtered is up six per cent. In Western Canada, steer dressed carcass weights are 829 pounds, down from 884 pounds last year.

Choice wholesale beef has rallied nearly US$40/cwt since early April reaching US$248 in mid-May. Select product has lagged which reflects larger supplies of green cattle coming on the market. Select wholesale prices were trading at US$225/cwt but these are both very good prices from a historical perspective. The problem is that retail beef prices have been grinding lower over the past year and we now see retail margins coming under pressure. It takes time for retailers to increase prices.

If we see a similar jump in retail prices as in the wholesale market, the retail market will function to ration demand and slow consumption, which is not what the market needs heading into the third quarter. We need to see the retail market remain relatively flat or increase slightly so that beef consumption doesn’t slowdown.

Feedlot margins have been historically strong, reaching over $300 per head for an extended period. However, it wasn’t until we saw the jump in fed cattle during the first week of May that feedlot operators bid up the price of replacements.

The inability for feedlots to lock in margins in the deferred positions kept a lid on feeder cattle prices earlier in spring. There was no way any operator would go out on a limb and bid aggressively for feeders if they couldn’t lock in a profit. We’ve now seen 600- to 650-pound steer calves trade in the range of $240 to as high as $255. I’m expecting the feeder market to remain relatively flat through the summer. The fall period is a bit uncertain.

In conclusion, cow-calf producers should use this recent rally in the futures market to take some price protection on their fall marketings. I’m worried the feeding margins will come under pressure in the third quarter and feedlots may lower bids on replacements. Given the year-over-year increase in the U.S. calf crop, the market will have some very large supplies to work through this fall as well.

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First, JBS meat packers in Brazil — the worlds largest meat processor owning one of two major beef plants in Canada — had to deal with a scandal involving meat inspectors in Brazil who were allegedly bribed to “permit the sale and export of rotten meat.”

Just that line alone “permit the sale and export of rotten meat” has to raise an alarm with a consumer concerned about the quality of products in Canadian meat counters. Consumers are already wondering about meat products laden with antibiotics and hormones and now they have to wonder if that bright pink package of ground beef is harboring some rotten burger. If I can just make it to A & W for lunch I should be safe and okay.

The fact is there is no Brazilian ground beef in Canadian retail stores and Canadian beef is fresh, healthy and safe as it ever was. But an event like a “rotten” meat scandal makes an impression… and not a good one. Brazil is working hard to clean up the mess and protect its $14-billion meat industry.

Consumer confidence

Next into the headlines, Robin Hood Flour, a Mother Corp. for wholesome, high quality, pure-as-the-driven snow wheat flour had to recall some of its products due to contamination from E. coli O121 bacteria. At first it was just a recall of 10 pound bags of flour in Western Canada, and then the recall went nation wide. Twelve people in B.C., four in Alberta, four in Saskatchewan and five in Newfoundland were among 25 cases of people getting sick due to that particular strain of E.coli.

So where did this come from? How does E.coli get into flour? Could it have some connection to stinky old raw pig manure that goes on the land, high herbicides residues in grains, or those millions of acres of genetically modified wheat across the prairies? It’s all pretty suspect. It could be one or a combination of those factors.

Again the fact is that Robin Hood is cranking out tons of healthy safe flour, there are no herbicide residues and there is no genetically modified wheat — at least not yet anyway. But for ag industry critics, the uninformed, even leery or questioning consumers E. coli in flour may make them at least pause with some concern. How safe is this stuff? Mom’s homemade, fresh baked bread and a glass of cold, wholesome milk almost share the same pedestal in the consumer’s mind. Don’t mess with bread and milk.

And then to add to the whole credibility concern about agriculture, another headline in the daily paper the day of this writing warns that “thawing farmer’s fields fuel climate change.” This has to do with tons of nitrous oxide, probably from the overuse of chemical fertilizers, floating off fields as the ground thaws creating holes in the ozone layer you could drive a bus through. I think I saw one hole in the sky this morning as I was driving over to A & W for a life saving breakfast. A & W is like a bombshelter in the hostile food world.

Environmental issues too

I wanted to learn more about how or why the annual spring thaw was “fuelling climate change,” so I called the lead researcher, Dr. Claudia Wagner-Riddle at the University of Guelph. She was helpful. I came away believing her research is sound, but the headline on the story in my daily paper may not have told the whole story.

Wagner-Riddle, with the University of Guelph School of Environment Sciences is studying greenhouse gas emissions from farmland, such as carbon dioxide (C02) and nitrous oxide (N20).

An important part of this project was determining a field-scale system for measuring nitrous oxide emissions from farmland. In the past they could take a frozen soil sample, thaw it out in the lab and measure gas release from the sample. But in this more recent work she developed a system that works on a field scale basis. She worked with farmland in Ontario and as well with the University of Manitoba on farmland in Manitoba. She had 14 years of research information from Ontario and nine years from Manitoba.

With that research information, she then gathered readings from 10 other locations in Canada as well as in the U.S., Japan, China and Germany. By extrapolating those findings to cropland world wide exposed to freeze/thawing cycles she came up with a figure.

Based on all the data, the freeze/thaw cycle worldwide produces about a teragram — one billion kilograms — of nitrous oxide per year. While the research might be out by a tonne or two here and there, the amount of nitrous oxide produced had not been qualified before.

So is every acre of western Canadian farmland contributing to the release of nitrous oxide into the atmosphere? Should we shut down farming?

No. The main contributor to the release of this harmful greenhouse gas is water-logged soils, particularly as they freeze and thaw. Parts of Manitoba and Ontario are very familiar with wet conditions, and the range might extend even much further across Western Canada after a very soggy 2016 growing and harvest season.

As you all remember from high school science class (I didn’t, I had to look it up) when soils become saturated soil microbes use nitrate — N to respire instead of oxygen — the process is called denitrification — resulting in the loss of nitrogen fertilizer to the atmosphere in the form of gases.

The fix is easy to describe, but not necessarily always easy to apply. Wagner-Riddle says maintaining late-season cover crops that use moisture, use up nitrogen and also provide some cover and insulation to reduce the degree of freezing is an important tool. Even just insuring there is crop stubble and residue on the soil helps to trap snow and again provides some measure of insulation against a real solid freeze. Pasture and hayland are less prone to denitrification than annual crop land and certainly compared to conventionally tilled farm land. The worst case scenario involves saturated soils that have been cultivated and have no cover.

And of course once you get into tillage that stimulates the loss of another greenhouse gas, carbon dioxide so fields could be releasing C02 as well as nitrous oxide.

Keeping crops growing and the ground covered will help reduce the risk of nitrous oxide emissions, says Wagner-Riddle but the dilemma for many producers — when the soil gets wet, some tillage is needed to get it dried out. Tile drainage might be an option in some situations, but it comes with a capital cost. And then on top of that most provincial governments in Western Canada really don’t understand tile drainage or have regulations in place to accommodate it.

Most farmers in Western Canada today are following some program of direct seeding or reduced tillage, but when conditions get wet, what do you do? I guess just be aware of the hazards that tillage causes, and where and when possible keep the tillage tool parked and some kind of cover on your land. Stop reading the paper might help too.

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Feedlot margins have been hovering near historic highs over the past month. Feeder cattle prices have also strengthened but not to the extent of the fed market. Larger-frame, lower-flesh mixed steers averaging 925 pounds were quoted at $172 landed in southern Alberta feedlots in late April. Feeder cattle prices are below the fed market, which doesn’t occur that often. In the short term, the fed cattle market will likely trade sideways and then soften in the third quarter. Feeder cattle prices are expected to stay firm throughout the summer and then come under pressure later in fall.

Cattle on feed in Alberta and Saskatchewan as of April 1 were 906,273 head, down four per cent from 941,140 head on April 1 of 2016. March placements were 185,763 head, up 15 per cent from March of 2016, while marketings were 135,750, up four per cent from 131,128 head last year.

Retail prices rationed demand

I strongly believe one of the main reasons for lower cattle and beef values last fall was due to relatively strong retail beef prices. The retail market was rationing demand while beef supplies were building, and building rather quickly. It was a supply crunch hangover, which usually causes the market to overextend to the downside.

This year, retail prices are encouraging demand with ground beef down six per cent from year-ago levels and down 15 per cent from April of 2015. Secondly, prices are lower for all staple foods, allowing consumers more freedom to choose higher-priced items such as beef, and which is now cheaper than a year ago. The wholesale retail spread has moved back in line to traditional levels.

The feeder cattle market has been percolating higher with favourable feeding margins. Remember, cattle feeding is a competitive business. In the long run, feedlots will bid up the price of feeder cattle until there is no margin.

Hedges not advised

Feedlot operators have been hesitant to bid up the feeder market because the cash price for fed cattle is sharply above the futures market. However, as time goes on, there are ideas that the futures market has been undervalued for both live and feeder contracts. In any case, the feeder market will likely hold value with feedlot margins running over $400 per head.

In central Alberta, Charolais-cross steers averaging 520 pounds reached up to a whopping $240; similar-quality heifers weighing from 500 to 530 pounds were actively moving from $200 to $203.

Given the strong cash market, no hedges are advised for fed or feeder cattle. Secondly, the Canadian feeder cattle market is trading at a premium to the U.S. values. This is making it difficult for Canadian producers to hedge or buy price insurance for their production. On April 21, CME composite price for 650 to 849 feeder steers, which is the official cash settlement price for the CME feeder cattle futures, was US$138.05 and the May feeder cattle futures closed at US$139.25.

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