Loonie – Thoughts From The Middle of Nowhere

The Canadian cattlemen have really been getting beat on in the last few years. I really feel for them. First there was the case of <acronym title="Bovine Spongiform Encephalopathy">BSE</acronym> which closed the border into the US where a large portion of their beef goes and really sent the market into a nose dive. A lot of people got hurt there. Now they are having problems because of E-coli and Ranchers Beef packing plant in Alberta which has caused the <acronym title="United States Department of Agriculture, Bought and Paid for by The Big Meat Packers">USDA</acronym> is really cracking down on meat from Canada and testing it for E-coli which is driving prices down. What's next in their woes? The Loonie. n nYes, the <a href="http://www.canada.com/saskatoonstarphoenix/news/business/story.html?id=603e1d0f-7622-4b68-962f-636bc813ecc7&k=51494">strength of the Loonie</a>. n n<blockquote>The turnaround from profit to loss in the Canadian livestock industry has been as rapid these past three months as the rise in the Canadian dollar. n nSaskatchewan industry players say this has created a cash crunch problem that could rival, for the beef industry, the tough times of the <acronym title="Bovine Spongiform Encephalopathy">BSE</acronym> crisis four years ago. n n"This time, the losses are getting pretty large as well with no relief in sight," said Brad Wildeman, the vice-president of the Canadian Cattlemen's Association. "In some ways, the outlook is gloomy or gloomier because it doesn't seem like governments or anybody has realized the effect this dollar is having." n nThis year, cattle producers are seeing a drop of income of about $200 a head for finished fat cattle this month compared to May of this year, when the loonie was trading around 92 cents US. n nWildeman said the loss in income per animal is even greater — perhaps as much as $250 a head — for cow-calf operators selling this year's calf crop into the North American feeder market. The irony is the high Canadian dollar hasn't deterred American cattle buyers from flocking to Prairie auction marts this fall to buy up the calves to take them south for fattening.</blockquote> n nWow. I don't even know what to say. Feed shortages, drought, hell even disease a cowboy can understand but the weakness of the American dollar causing such losses. I can't quite wrap my head around that. <a href="http://completerunning.com/Loping-LouBob/?p=831">Linda</a> has been talking about the situation and I will be damned if I know the answer. n nHell, even illegally crops are suffering from the strength of the Loonie. It appears that <a href="http://www.billingsgazette.net/articles/2007/11/12/news/state/30-pot.txt">marijuana smuggling from Canada is going up in smoke</a>, all thanks to the strength of the Loonie. At least in this case consumers of this product don't have to worry, the dollar is gaining ground against the Peso so we will just see more of it coming across the southern border. Hell, we might even see more beef coming from that way if that is true. Cheap Mexican cattle ios why the Texas Feeder Association is such a powerful lobby in Congress. They make tons of money buying cheap Mexican cattle, feeding them and then pawning them off as American cattle for high prices. n nI'm sure our turn in the US will be coming for poor beef prices. That's the way the market works. We held our own in price this year but with the rise in price of fuel and feed, getting the same price is like taking a price cut. I hate to think about when the market does go down here. There will be a blood bath. Lucky thing is, the signs aren't showing yet that cattlemen are trying to overproduce so it might be a while yet. It's more important than ever to keep your place debt free if at all possible. Who would have ever thunk the value of the Loonie would hurt Canadian cattlemen so. Not I. Such esoteric things are beyond my feeble brain. n nTime is more value than money. You can get more money, but you cannot get more time. Jim Rohn