Ask John Wildenborg if he thinks Canadians will be paying more for steak during future barbecue seasons, and the owner of Calgary specialty butcher shop Master Meats doesn’t hesitate.
“Prices are definitely going to go higher, no ifs, ands or buts about it,” he said.
“It keeps me up at night, actually, thinking about coming into the summer and where prices are going to be. It’s not a good situation.”
Beef — whether in the form of a juicy burger or a classic tenderloin steak — is a mainstay of many Canadians’ diets. Its popularity is the reason why consumer demand for beef has historically remained strong, even through periods of economic downturn when Canadians have less money in their wallets.
But the business of beef is changing, in large part due to consecutive years of severe drought across North America’s main cattle-producing regions. From parched southern Alberta to water-scarce east Texas, ranchers have been downsizing their herds due to a lack of grass for grazing. The resulting shortfall in cattle supply is reducing overall beef production and helping to push retail beef prices higher.
“A 10-ounce New Yorker right now … would cost around $20. Three years ago that was maybe a $15 steak,” Wildenborg said.
“And this is usually the slow time of year for beef, but wholesale prices haven’t dropped off at all since Christmas. I’m paying 40 per cent higher than I was last year at this time.”
Food in general, as consumers know, has increased in price over the last three years due to the COVID-19 pandemic and an overall rising cost of living. But while inflation is starting to moderate in a number of food categories, the drought factor means beef prices are not.
“When you talk to producers, whether it’s in the Canadian provinces or key cattle-producing regions of the United States, many producers will tell you they’ve had to experience two ‘hundred-year droughts’ back-to-back over the course of 10 years,” said Lance Zimmerman, a Kansas-based senior beef analyst with Rabobank.
“Add to that a global pandemic and all the challenges that go along with that, and we’ve had a 10- to 15-year period that’s been particularly challenging for a lot of cattle producers. It has led to a lot of liquidation.”
Liquidation is when a rancher makes the decision to sell off a greater proportion of heifers and cows for slaughter rather than retaining them to grow his or her herd. Ranchers may decide to do this because of a variety of factors, including high input costs, limited labour availability and high interest rates, as well as the challenges associated with long-term drought.
In Canada, the size of the national cattle herd has been declining for years, a trend that continued last year amid a punishing drought in Western Canada. This country’s beef cow inventory fell in 2023 by 1.5 per cent to 3.66 million animals — the lowest level since 1989.
South of the border, U.S. Department of Agriculture figures show an even more dramatic story. There, the national cattle herd has been contracting for five years, reaching 28.2 million animals in 2023. That’s the smallest number of cattle the U.S. has seen since 1961.
Fewer cattle means less beef production, which translates to fewer exports as well as higher prices at the retail counter.
“Unfortunately for the consumer, those prices are going to ratchet higher,” said Zimmerman.
“On a U.S. basis, retail beef prices are currently about US$8 a pound, and by our estimation, over the next several years we can expect another dollar-and-a-half increase, quite easily.”
In southeast Alberta, near the tiny community of Jenner, rancher Brad Osadczuk shipped some of his cattle east to Saskatchewan last summer to graze on rented pastureland. It was the only way he could feed them because his own grassland was entirely depleted by drought.
“This past year was the worst year for drought in adult life and I was born in 1971,” Osadczuk said. “Our native prairie just never turned green.”
While Osadczuk was able to avoid reducing his herd size, he said many ranchers in his area have been choosing not to replace cows after they sell them for at least the past five years.
“We’ve been mitigating drought for a long time,” he said.
“So we’re kind of at a point in this part of Alberta where our herds are pretty small already.”
Even if the current drought cycle were to end this year, cattle numbers can’t rebound overnight. That’s why experts say the new era of higher beef prices is here to stay, at least for a while.
“This isn’t a short-term thing,” Osadczuk said.
“For a female calf that is born today, it’s four years before that female can have its own calf that can end up in the food chain.”
Anne Wasko, a Saskatchewan-based market analyst with Gateway Livestock, said North American cattle and beef supplies will remain tight for several years, and much is riding on Mother Nature.
“We’re going to be looking at smaller supplies in ’24, ’25 and possibly out as far as ’26,” she said.
“We truly need moisture, first and foremost, to turn this boat around.”
This report by The Canadian Press was first published Feb. 25, 2024.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
