Feeder cattle prices at auction yards across Manitoba saw some major declines during the week ended Feb. 15, following the falling futures markets in the U.S.
The cattle that were hit the hardest were those weighing over 700 pounds, with those in the 800- to 900-lb. class getting the worst of it, said Rick Wright, a buyer with Heartland Order Buying Co.
Lighter-weight feeder cattle fell during the week as well, but not to the same extent.
Wright said the lighter-weight cattle weren’t hit as hard because there’s still opportunity for them to go on grass to gain weight, while the heavier weights have to go on feed right away, which is expensive and in short supply in Manitoba.
Most of the losses during the week were linked to the sharply lower futures market in the U.S. Wright said nobody has a really solid explanation of why the futures market fell during the week.
“Corn futures in the U.S. were down nine days in a row, and normally when corn is down the (cattle) futures should go up, so it’s very unusual for the market to react the way it did this week,” he said.
Wright said the futures market may have fell so sharply during the week because “reports of continuous losses in the feeding and packing side of it throughout the fall, and throughout the month of January, were starting to drive home to some of the feedlot operators and packing companies that they need to do some price adjusting.”
The wonky futures market had buyers very cautious, and decreased the demand from the East and the U.S., despite a much weaker Canadian dollar versus its U.S. counterpart.
“Buyers from the U.S. were cautious because they’re very sensitive to the futures, so if the futures move down, they move down very rapidly,” Wright said. “And there wasn’t quite as much Ontario interest as there was in previous weeks, just because of that unknown part of what happened in the futures.”
The volumes on the feeder cattle were strong during the week because farmers are marketing their cattle earlier and lighter due to high feed costs.
Producers, Wright said, “have a real shortage of roughage, hay and silage and even feed grains are costly enough right now that it doesn’t pay to put the weight on the cattle.”
Those high volumes now will affect what happens in the cattle markets in Manitoba during the spring, he said. “I expect that we’ll see considerably less cattle go to market in March and April than we did last year… It’s not the market that’s driving them to sell the cattle; it’s the shortage of feed.”
Though feeder prices saw a sharp drop during the week, the slaughter side of the market managed to stay fairly steady due to strong demand for killing cows.
“The beef market in the retail side is fairly strong, consumers are looking at alternative proteins and hamburger is moving very well,” Wright said.
Since mid-January, slaughter cow prices have probably moved up about four to five cents per pound due to the strong demand, Wright noted.
There have also been good volumes of slaughter cattle coming to market. Wright said so far in 2013 there have been more killing cows marketed than during the same period in 2012.
“In January out of Canada, we exported almost twice as many cows to the U.S. than we did the year before in January. And so we’re seeing a lot of cows coming into the market.”