Manitoba beef producers gearing up for the fall cattle run are looking for a ray of sunshine in the marketplace but it’s hard to find.
Prices show little sign of improvement as a strong Canadian dollar, slow beef movement and the U. S. country-of-origin meat labelling rule continue to haunt the cattle market.
“We’re seeing finished cattle prices as low as we’ve seen them for a very long time,” said Rick Wright, head order buyer in Manitoba for Lakeside Feeders and Nilsson Brothers.
The same is true for calf prices. Feedlot operators bleeding red ink are reluctant to bid up prices for calves coming to market.
The demand for calves is there, but it is unpredictable and prices are very volatile, Wright said.
“You don’t know right now what you’re going to get for those calves when you take them in. It doesn’t matter where you market them.”
Right now, chances of producers breaking even financially on a calf at auction are “marginal,” said Wright.
Logically, prices should be better because of low supplies. Cattle herds in Canada are shrinking. Statistics Canada reports the number of cattle in Canada as of July 1 was two per cent lower than last year and down six per cent from 2007. Beef replacement heifers are down 2.5 per cent.
There should be lots of demand for calves this fall because the calf crop will be lower, said Joe Bouchard, Manitoba Cattle Producers Association president.
“Feedlots have to be full for the guys to make money. If they can source the grain to make money, I think they will be buying,” Bouchard said.
Reports out of Ontario say cattle feeders will be short 200,000 calves this year because of shrinking cow herds and they will need to source calves out of province.
But packers have reduced kill numbers because of a slow demand for beef at the retail level. An excess of cheap pork in grocery stores means little improvement for beef prices in the short term, said Wright.
Wright said producers can achieve some improved returns by age verifying cattle, which doesn’t cost anything. Some buyers are willing to pay another three to four cents a pound for an age-verified calf. That means an extra $18 to $24 on a 600-pound calf which the producer otherwise wouldn’t have had.
The industry is waiting to see if a new Alberta cattle price insurance program for feedlots will stabilize feeder prices in that province, said Wright.
Fewer slaughter and feeder cattle are going to the United States because of the country-of-origin labelling (COOL) rule. Wright said some American buyers are purchasing calves to finish in Canada as a result.
But Bouchard said a large expected U. S. corn crop will make it cheaper for Americans to finish animals at home than in Canada.
The fall calf run is expected to be late in Manitoba this year because late-summer rains improved pasture conditions. Wright said the biggest movements normally occur in late October and early November.
But the calf run started early in Alberta this year because of drought in spring and summer. [email protected]