The cattle market seems to be carving out a bottom for itself as the summer season winds down. Just over 650 animals made their way through the rings of the few auction marts that were open during the week ended Aug. 25.
Prices were a bit softer than last week, for the most part. Butcher cows and heifers traded $3-$5 lower per hundredweight while heifers were $5 lower. One mart said feeders were taking some losses due to grading issues. A few new-crop calves showed up and yearlings traded strong.
According to Herb Lock of Farm$ense Marketing, the market is looking for a new low right now, and some of that bearishness can be traced to the large herd south of the border.
“Americans have been rebuilding their cattle herd for three years and (the herd) has gone up by six per cent,” he said.
The U.S. Cattle on Feed report will only add to the bearish scenario, he added. “Feedlots have been profitable; they’re bullish so they buy feeder cattle.”
Closer to home, Lock noted signs of encouragement. For instance, fat cattle in Western Canada were $3-$4 above Nebraska land values during mid-August. “That’s the first time in 12 years we’ve seen that.”
In the fall, he said, prices could find themselves in a range similar to last year.
“Some of these calves are selling for $25-$35 (per hundredweight) more today for delivery in October than they sold for in October last year. So that could mean 125 bucks above last year,” he said.
So far this year the heifer kill has been large on the Prairies and the U.S. cow kill looks like it could be 10 per cent higher on a consistent basis as well, according to Lock.
However, he added, “carcass weights in the U.S. are within striking distance of a year ago… so we have more cattle and bigger cattle, more beef.”
On the consumer front, Lock expects sales to slow down after the Labour Day holiday on Sept. 4.
“After (that) weekend everyone has a different view of spending money on meat so the supply continues to build,” he explained.
The good news is, those supplies should be ready to unload in the new year.
“It’s starting to offer some light for January, February and March,” he said. “We’re going to hurry and put cattle on feed.”
The Prairie barley market is hanging steady, he said, which is good news for growers, but forward delivery is more expensive.