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Strong prices lead to marked drop in Manitoba herd

For the second consecutive week, cattle volumes rose at auctions across Manitoba, as the doldrums of summer give way to increased market movement. Six auction marts held sales, with volumes ranging from 70 animals to 692. All told, around 1,850 animals made their way through the rings for the week ended Aug. 22, up 850 from the week before.

Prices for feeder animals remain firm, with steers in the 500- to 600-pound class drawing top-end bids of $260 per hundredweight.

Activity on the slaughter end was also busy, although some classes of animals drew slightly lower bids than the previous week. D1-D2 cows, D3-D4 cows and age-verified animals were fractionally lower.

This year’s sky-high prices have caused a noticeable drop in the number of animals that reside in Manitoba. According to Statistics Canada, there were 2.8 per cent fewer cows in Manitoba as of July 1, 2014 compared to the previous year. The next highest provincial decline was in Saskatchewan, which recorded a drop of just 2.2 per cent during the same time period.

Although the beef market is difficult to predict, Anne Wasko, a commodity analyst for Gateway Livestock Exchange at Taber, Alta., suspects certain values are starting to settle back as fall approaches.

“There’s a feeling that, at some point, as consumers see other alternatives for proteins, whether it’s lower-priced pork or poultry, it could put a lid on the demand seen for beef.”

Expectations are that the market will see increasing supplies of both pork and poultry in the months to come, said Wasko.

That sentiment is backed up by Statistics Canada, which found a 1.3 per cent increase (12.9 million animals) in the number of hogs residing at Canadian farms as of July 1, 2014.

Wasko said price reductions in beef will initially be felt at the processor level, before backing off at the feedlot level and, eventually, the retail level.

Sizable reductions won’t happen overnight, she added, as many of the fundamentals that led to the record-high prices are still in effect.

“Today more of the impact is on the slaughter side but depending on margins, that could infiltrate back to the feeder market as we go down the road.

“What’s now becoming more apparent as we head toward 2015 is the expectation of more pork and poultry ahead of us,” she said.

Hamburger continues to draw a lot of interest, she said, as record prices for lean trim dominated the spring and summer; strength was also seen in the end meats as well, “both rounds and chuck cuts.”

The tightness of the market will continue to dictate healthy bids, she stressed; they just might not be as high as before.

“There still will be great prices from a historical perspective but it probably won’t be at the levels we saw in July,” she said.

About the author

Columnist

Dave Sims

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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