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Feed costs weigh on prices for “plainer” cattle

The number of cattle moving through Manitoba’s auction yards started to slow down during the week ended April 13. For what was moving, the top-quality animals continued to be met with solid demand, but prices started to weaken for the lower-quality animals on offer.

“The plainer-type cattle were down a little bit,” said Buddy Bergner of Ashern Auction Mart. The weakness there, he said, was likely tied in part to the rising cost of feed grain.

Feed, freight and fuel prices are all going up, making it more expensive to ship cattle and feed them once they get where they’re going. As costs go up, buyers are unable to spend as much on the cattle, said Bergner.

However, the top-quality animals were still bringing a good price, for the most part, and values on those animals were relatively steady on the week across the province.

The biggest demand for feeder cattle, Bergner said, was coming from eastern feedyards in Ontario, with small numbers moving to Alberta as well.

Volumes held up at the Ashern yard during the week, with around 1,600 cattle on offer at Wednesday’s sale. However, numbers were starting to drop off at many other auctions in Manitoba, as activity shows signs of slowing down for the season.

“We’re a month ahead of time,” said Bergner on the relatively early spring and lack of winter this year. As a result, cattle sales are also a month ahead of schedule for many producers itching to get out on their fields.

It is still too early to expect much seeding, as it is only mid-April and the chance remains for a late winter storm or freezing temperatures. At the same time it won’t be long until farmers are busy with spring seeding, which will further limit activity at auction yards.

On the butcher side, plainer cull cows were also a little weaker on the week, though top-quality animals continued to see good demand. Bulls were generally stronger at most yards around the province.

Narrow spread on quality

The best prices were for any age-verified animals able to cross the border into the U.S., said Bergner. The start of the summer barbecue season could be one anecdotal reason behind any strength for those animals going to the ground beef market, as baseball parks open for the year and people start eating more hamburgers and hotdogs.

U.S. beef cutout values provided by the U.S. Department of Agriculture did see some improvement during the week, posting their first increases after five weeks of trending lower. One interesting thing about those cutout values is the very narrow spread between higher-quality “choice” beef and the lower-quality “select.” The choice boxed beef cutout value increased 75 cents, to US$178.16 per hundredweight, during the week. The select cutout rose by US$2.36, to US$177.34/cwt. While that spread is historically narrower at this time of year, at less than a dollar, it’s well off the average for this time of year, closer to US$5. Back in January, the spread between the two grades was around US$12.

Analysts cite the narrowing choice/select spread as a sign of reduced demand for beef from the U.S. public. High prices for steaks and roasts cause consumers to back away from those more expensive cuts of meat — and the recent concerns over ground beef were causing them to turn away from that side of the coin as well. Time will tell whether those patterns have staying power.

About the author

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Phil Franz-Warkentin - MarketsFarm

Phil Franz-Warkentin writes for MarketsFarm specializing in grain and commodity market reporting.

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