High feed costs, lower beef demand pressure prices

Feeder cattle prices across Manitoba were starting to see a slight recovery during the week ended March 1, from the market’s “crash” in mid-February, but haven’t managed to move back to the levels that were seen prior to the fall.

Prices weren’t able to climb back to pre-crash levels because feed costs are still extremely high, beef movement is sluggish and the finished futures market has not been strong enough to bring prices back up, said Rick Wright, a buyer with Heartland Buying Order Co.

“Everything seems to have found a level but (the market) certainly isn’t rapidly increasing by any means, and we don’t think it’s going to either,” he said.

The future of cattle prices in the province, he said, is largely dependent on the weather situation this spring. “The whole market is pivotal around the weather because basically it’s going to determine how much it will cost us to feed these cows.”

Prices were described as steady compared to a week ago, amid strong volumes and good demand for feeder cattle. Routine demand came from buyers in Eastern and Western Canada, but there was a pickup in demand from south of the Canada/U.S. border.

“With the Canadian dollar dropping and the futures recovering slightly, the Americans were able to purchase some cattle,” Wright said — and most of the increased U.S. demand was for Manitoba cattle, he added.

“In some classes of cattle, we’re bringing the same price per pound as they are in Alberta and that’s because the calves are going into Ontario or going into the U.S.,” he said. “So freight differential is neutralized when you get to that.”

There was very little local demand during the week, but it’s not because Manitoba farmers aren’t interested in rebuilding their herds, Wright said.

“There’s a want to expand but they’re going to have to have feed and pasture to do that,” he said. “So, it’s very pivotal to what the weather is doing here because that’s going to dictate how much it will cost to feed these cows.”

Another reason why local farmers aren’t out buying is because the backgrounding lots are all full in Manitoba. Farmers are keeping the big cattle around since they aren’t able to make a profit off them with current prices, Wright said.

Demand for cows on the slaughter market was strong, which helped prices see some gains during the week. A lot of the demand was linked to U.S. buyers bringing some age-verified cows across the border.

Boxed beef prices were higher in the U.S. during the week, which sparked an increased demand for the cheaper alternative of hamburger meat, said Wright.

Volumes were strong again for slaughter cows during the week, as farmers are opting to sell cows instead of trying to feed them to increase their value because of high feed prices, he said.

Feeder cattle numbers were also abundant during the week, but that shouldn’t continue for much longer.

“I think a lot of the March and April cattle have come already,” said Wright. “We’ll see probably another week of the high numbers that we’ll see at the markets, and then we’ll start to decline from there.”

About the author

Columnist

Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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