Large price swings in the U.S. cattle futures led to similar activity in the Manitoba cattle auctions during the week ended May 5.
U.S. cattle prices rallied sharply the first few days of May, with unseasonal snow that killed thousands of cattle in key U.S. feeding regions behind some of the buying interest. The resulting strength in the U.S. cattle sector spilled into Canada, with prices hitting some of their best levels of the past year at sales held May 2-3. However, the U.S. market turned the corner May 4-5 and the resulting activity at Friday’s Winnipeg Livestock Sales auction saw steady trade on the week.
“With so many longs in the market, ‘who’s left to buy?’” said Ben DiCostanzo, an analyst with Walsh Trading in Chicago. “At some point, there will be some profit-taking.
“I’m afraid to be a buyer up here, but I’m also afraid to sell,” he said, adding “it’s really rough to be short in these markets right now.”
Robin Hill of Heartland Livestock Services at Virden held his sale May 3, when U.S. prices were at their height.
“We’ve definitely seen the highest prices since last year’s calves this week,” said Hill, noting prices have climbed since the beginning of March.
“For anybody still looking for inventory, it’s costing them more every week,” he added. “I think we’ve seen the highs, and now we’ll see it back off.”
As prices back off, seasonal issues should also see volumes slow down at the auction yards.
In addition, the generally strong prices will likely see fewer cattle held back to go to grass than a year ago. When there’s money to be made today, “why take a chance?” said Hill.
“The feeder market is strong because the fat market is stronger than anybody ever predicted,” he said.
“It was less than six months ago that we were not making money on fat cattle,” he added, pointing to the cyclical nature of the cattle market.
Looking at the feed situation, Hill said there were ample supplies of grain and silage in the countryside.
However, while grain farmers were still waiting for fields to dry out in some areas, some pasture could use a half inch of rain, “to give the grass a wash-off.”