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Beef Demand To Rise, Supply To Drop In 2011

Ca t t l e producers in Manitoba saw a nice increase in price for their product during 2010, and it appears as though that trend will continue in 2011.

Anne Dunford, general manager of Gateway Livestock in Taber, Alta., said supplies have been dwindling across Canada over the past five years, and the decline in numbers has finally resulted in prices moving higher.

“Each year we are producing a smaller calf crop. It takes awhile before it turns into a smaller amount of product at the consumer level, but we are now starting to feel some of those impacts,” Dunford said. “It (supply) was tight this year, and it will be tighter from the supply scene in 2011.”

Rick Wright of the Heartland Order Buying Company in Winnipeg, echoed the fact that there will be fewer cattle available to buy in the new year.

“In the fall of 2010, most of the cattle that were sold are not going to be up for sale again in 2011, as a lot are going into retained ownership programs,” Wright said. “If the animals are less than 600 pounds, a lot are going onto grass, and won’t be available until September, while the heavier cattle are going into finishing lots and will be finished out. So we are likely to be even shorter than usual in terms of supply in the spring.”

While supplies have been on the decline, demand has been rising. A number of new importers came into the market from Asia in 2010, and their demand is likely to grow in 2011.

“We only have third-quarter export data in for Canada, but it’s up about 11 to 12 per cent over last year. Late in the year, there’s been some exciting news that we know will grow into more business down the road in China,” Dunford said. “We might not sell a lot of high-end steaks there, but some of the lower-end cuts are going to bring good prices in these newer markets.”

Wright agreed that China is becoming a more viable market, but he said there is no question where the majority of Canada’s beef exports get delivered.

“The U.S. is our No. 1 customer, and they are about 30 per cent under capacity in their feedlots right now, and with their dollar being very weak, it’s easy for them to export, but hard to import,” he said. “Canada is their closest place to get animals from, and I think that will continue for a quite some time.”

The fall of 2010 saw a number of conditions that would normally push cattle prices lower, but instead, values continued to push higher. Wright said that can only be good news going forward.

“We saw our dollar trading at par, and we saw extremely high corn prices. Barley prices were on the increase here in Canada, and although our economy was decent, it certainly was not super strong. Those fundamentals should have all pointed to lower cattle prices but they didn’t, so things are looking good going into 2011,” he said.

Wright said it’s likely producers are going to have to get used to marketing cattle with the Canadian dollar at, or above par with the U.S. greenback.

“It makes it difficult to export cattle to the U.S., but I think we’re going to have to get used to shipping cattle south with a semi-par dollar,” he said.

MANITOBA AUCTION MARTS’ HOLIDAY SCHEDULES

ASHERN LIVESTOCK MART:Last sale, December 15, 2010; Sales will resume January 12, 2011.

GLADSTONE AUCTION MART:Last Sale, December 14, 2010; Sales will resume January 11, 2011.

GRUNTHAL LIVESTOCK AUCTION MART:Last sale, December 15, 2010; Sales will resume January 12, 2011.

HEARTLAND LIVESTOCK SERVICES, BRANDON:Last sale, December 21, 2010; Sales will resume January 11, 2011.

STE. ROSE AUCTION MART LTD. :Last sale, December 16, 2010; Sales will resume January 13, 2011.

KILLARNEY AUCTION MART:Last sale, December 16, 2010; Sales will resume January 20, 2011.

HEARTLAND LIVESTOCK SERVICES, VIRDEN:Last sale, December 22, 2010; Sales will resume January 5, 2011.

Winnipeg LIVESTOCK SALES LTD. :Last sale, December 17, 2010; Sales will resume January 6, 2011.

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BRENT HARDER

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