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Manitoba cattle markets seen due for correction

Market volatility is expected on heavier-weight cattle

It was a strong start to the new year for the Manitoba beef sector as the 2018 auction year kicked off; however, one cattle buyer said it won’t continue.

“I hate to be doom and gloom but the facts are the facts and I spent a lot of time studying this stuff for the job that I have. It tells me that we’re going to have smaller sales,” said Rick Wright, a broker for Heartland Order Buying Co.

Five of the eight major Manitoba auction marts held their first sales of the new year with 3,254 head of cattle sold through the week ended Jan. 12. Prices were steady with cattle under the 600-lb. mark selling for between $170 and $210 per hundredweight (cwt). The heavier-weighted cattle, between 700 and 900 lbs., sold lower than the industry had expected heading into the holiday break, at between $150 and $190/cwt.

“We had often mentioned in the past that we thought that the November, December market was oversold on the feeder cattle, that they were overpriced,” Wright said, “and certainly those comments are coming to fruition here right now because the market is very selective.”

The 2017 fall run saw a large volume of cattle through the province’s auction marts, with prices higher than the previous year. In November 2016, prices for feeder steers (400-500 lbs.) were under the $200/cwt mark while last month, prices were closer to $230/cwt. After the large fall run, the province’s cattle market is due for a correction, according to Wright.

Producers, he said, “liked what they were seeing for dollars per head for the calves, so they marketed those calves and that means that we’re going to be short a fairly even percentage of deliveries here in the spring.”

Wright expects the light cattle market to be fine over the long term because most of those cattle won’t head to the auction mart until the end of the year or even into 2019. It’ll be a volatile market over the next month, though, for the heavier-weighted cattle.

“The meat’s selling quite well but there’s nervousness over what’s going to happen with (the North American Free Trade Agreement) and the economy,” he said. “There’s nervousness about whether or not they’re going to up the interest rates on both sides of the border and what effect that’ll have to value of the Canadian dollar.”

It’ll be an uncertain market until there is clarity on those issues, he said.

About the author

CNSC

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

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