If you're a cow-calf operator, you've got some really good times ahead of you, says Rick Wright, Executive Administrator of the Manitoba Livestock Marketing Association.
Strong cattle markets in 2024 have continued into January and the next 2 years look promising.
"I think you have to manage your operation to take advantage of this opportunity, but we've been waiting for this in the cow-calf industry for a very long time, and I hope the producers have got themselves positioned to get the maximum out of these markets," says Wright. "We're selling pounds and so the more pounds you can produce the more dollars you're going to put into your pocket for 2025."
Wright says the future of the cattle industry is dependent on five fundamentals that cattle producers are watching very closely.
The number of cattle producers and the supply of cattle, weather conditions especially drought conditions, the value of the Canadian dollar, an upcoming election here in Canada, and let's not forget the tariff threats from the U.S. all play their part on the markets.
"All these fundamentals are all knitted together and have an influence on the market. As a cow-calf producer, we don't have any influence on these things," adds Wright. "We just have to ride the wave. But that ride seems pretty good for the next two years, barring a black swan event along the way."
With healthy markets, Manitoba has seen quite a number of herd dispersals at the auction marts. Many cattle producers have dedicated their entire lives to the industry and are seeing the strong beef prices as a window to retirement. This in addition to higher land prices makes for a favorable opportunity.
For young farmers wanting to get into the cattle industry it's nearly impossible, says Wright.
"To step into it without the family helping you out by giving you a good deal on the farm and the inventory or being able to find some financing somewhere, the price of land is very, very high for cattle production," he explains. "The cost of buying cows is high. I don't suggest going out and buy cows at the money they are right now."
The challenge presents itself when the input costs have risen almost as much as the cattle market.
"And so, we're dealing with more money and we're getting very little more return on the money that we invested before but facing higher interest rates. If operating costs go up again this year and next year, cattle producers are going to have to see an even greater increase in the price for their product. And they're going to have to produce more pounds off each one of those cows to increase the profitability margin."