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Lukewarm buyer interest weighs on cattle prices

Traders are mindful of expectations for large supplies

Cattle prices stayed under pressure at auction marts across Manitoba during the week ended April 6. Bids were mostly similar to the previous week for steers and heifers; a little more interest may have been paid to cows.

“A lot of cows in Western Canada are coming to market now,” said Anne Wasko, a market analyst with Gateway Livestock.

Butcher cows traded fully steady while top cows also hung firm. Bulls drew firm bids with most outlets reporting highs over the $100/cwt mark.

Feeder cattle bounced around a bit more as the value of the Canadian dollar rose nearly three-quarters of a cent in value against its U.S. counterpart over the week.

It’s been a difficult six weeks for the cattle market since the highs of February, Wasko said. Both the cash market and the live cattle futures market have been weighed down by lukewarm buying interest.

Everyone has been aware of the swelling herd size in the U.S., she said, but other factors are also dragging down prices.

“More meat is arriving and we’re looking for bigger beef production, especially in the second quarter of 2018,” she said.

While the fed cattle market is quiet, activity should pick up as we get closer to June, she said. “From a grilling season perspective we’ve been off to a very slow start.”

Trade tensions between China and the U.S. are also threatening to put a damper on the beef market. Already, there are indications China could institute a beef tariff, similar to the 25 per cent duty that was placed on pork, on the U.S.

While nothing has been announced yet that directly impacts the market, Wasko said the potential is still there.

“We’ve all got our eyes on it,” she said. “If we are going down that tariff road it will be felt in Canada due to our price relationship.”

Livestock futures on the Chicago Mercantile Exchange fell on Friday, partly due to the threat of trade action. Traders also sold positions on expectations of large supplies in the coming months. Prices for physical livestock in the U.S. and wholesale beef fell, which stands to weigh on Canadian prices in the coming days.

A change in weather is likely on the wish list of most ranchers as calving season slowly kicks into gear. So far, Wasko said, conditions have been colder and damper than most producers like, but hopefully that will change.

“Warm and dry would be nice,” she said.

About the author

Columnist

Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Dave has a deep background in the radio industry and is a graduate of the University of Winnipeg. He lives in Winnipeg with his wife and two beautiful children. His hobbies include reading, podcasting and following the Atlanta Braves.

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