CO-OPERATOR STAFF / BRANDON
Feeder prices, already bright, are likely to get even brighter. I m not willing to quote any
prices or make any predictions on how high they might go, but I m pretty bullish that this market is going to be strong, Cargill s Tyler Friesen said at the recent Manitoba Beef Producers annual general meeting.
Cattle prices south of the border recently hit a new record, with fats in Nebraska selling for US$1.25 per pound, he said, adding that may set the stage for a breakthrough to a higher price level.
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While some regard the strong prices with suspicion, there are broader issues including near-zero interest rates and hedge-fund speculation driving markets up in all commodities, he said.
But auction-barn feeder-calf prices and the futures market are two different
things, Friesen added.
U.S. cattle inventories are already at record lows, and the drought in Texas and Oklahoma means that the herd will continue to drop. As well, higher grain prices also mean that competition for acres is swinging against cattle, he added.
The same is true in Canada, with the herd continuing to shrink post-BSE.
Meanwhile a falling U.S. dollar may lead to a doubling of beef exports south of the border, while a loonie at near par is putting a limit on prices north of the border, he said.
But while lower supply will force prices higher, this will eventually prompt consumers to reach for cheaper chicken and pork, he warned.
Ultimately, I think we should expect to see some pushback from the consumer, said Friesen.
However, overseas exports offer major potential for siphoning off supply from the North American market. For example, Cargill is targeting higher exports to Japan, where the Fukushima Daichi nuclear complex, crippled during last spring s tsunami, may have contaminated a huge swath of the country s fishing areas and farmland.
That could mean the nation of 100 million will be forced to look elsewhere for protein sources.
Japan has recently changed its stance on beef imports, and may open its borders to Canadian beef in the next nine to 15 months, said Fred Gorrell, Canada s market access secretariat, who also spoke at the Manitoba Beef Producers meeting.
That s a significant event, he said. He added that although China has
been officially open to Canadian beef imports for some time, a lingering dispute over the beta agonist feed additive ractopamine, which in beef is sold under the trade name Optaflexx, means that not one box of product has been sold to that country.
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Pretty Bullish That ThisMarket Is Going To BeStrong.
I m not willing to quote any prices or make any predictions on how high they might go, but I m
TYLER FRIESEN Cargill
