Feeder cattle prices at Manitoba’s cattle auctions have been steadily rising, though the rally isn’t expected to last for much longer.
“With futures dropping and grain prices going up, I expect (prices) will stay steady or drop a bit next week,” Grunthal Livestock Auction Mart manager Harold Unrau said.
Feed grain prices in Western Canada have been rising due to high export demand, which means local feed grain prices are competing with export markets.
Spiking COVID-19 cases across North America have set live cattle futures on edge, as market participants are spooked by the possibility of COVID-19 making its way into meat-processing plants as it did in early 2020.
On Nov. 19, nearby live cattle futures were down by 2.17 per cent to close at US$108.250/cwt. The contract has been moving steadily lower for the past week.
“There’s some nervousness in the markets about COVID cases in the packing plants,” Canfax analyst Brian Perillat explained.
“If cattle-processing plants slow down and cattle back up again, that can have a big impact on the market.”
That’s currently not the case in North American packing plants, he said, but is a concern in the back of market participants’ minds. In some cases, feedlots are still working through backlogs caused by COVID-19 shutdowns in March.
“There’s a lot of heavy fed cattle across North America,” Perillat said. “Feedlots have to move the cattle, and don’t have a lot of bargaining power.”
Market participants will also be watching for moves in the Canadian dollar, which has recently gained strength compared to its U.S. counterpart.
“If it breaks out of that 77-cent range, that’ll take a bite out of Canadian cattle prices.”
Last week, feeder steers (800-900 lbs.) at Grunthal were around $150-$166/cwt. This week, feeder steers of the same weight class were between $175 and $187/cwt.
Similarly, 700- to 800-lb. feeder heifers were between $145 and $180/cwt last week, rising to $155-$172.50 this week.