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U.S. drought pressures feeder market

Manitoba cattle auction marts operated in full holiday mode during the week ended July 27, with only a couple of yards holding sales.

Heartland Livestock Services in Brandon and Winnipeg Livestock Sales were the only auction yards able to provide market reports for the week.

Both auction marts reported a steady volume of cattle compared to the week prior. But, Brandon saw more feeder cattle and Winnipeg had a larger amount of cattle for sale on the slaughter market.

The number of slaughter cattle for sale in Brandon during the week was so low that they weren’t able to establish a slaughter steer and heifer market.

Prices during the week for slaughter cattle at Manitoba auction yards were fully steady, as there wasn’t much pushing the market one way or another, an industry official said.

Feeder cattle prices eased because of high feed prices caused by the drought in the U.S. Midwest, Scott Anderson, a field representative with Winnipeg Livestock Sales Ltd., said.

“There weren’t many feeder cattle being sold this week, but the people who were buying lowered their bids,” he said. “Because the guys who are buying them are going to have to deal with the high feed prices to fatten them up.”

Anderson said feeder cattle sold between 15 to 20 cents per pound lower than they did in the spring this year.

High feed prices also caused expected fall prices to drop significantly compared to what was being forecasted in the springtime, Anderson said.

“Now that feed prices are quite a bit higher, the cash prices in the ring will definitely be lower in the fall,” Anderson said. “A lot of the guys who put grass cattle out in the spring are going to be hard pressed to make any money at all.”

Producers who have yearling cattle to sell are going to have to send them to market soon because they’re running low on feed and pasture, Anderson said.

“I’ve had a couple of guys phoning already, asking about yearling prices and saying that they’re running out of grass because it’s been so dry,” he said. “So I think some of the drought conditions might actually get the fall runs moving early because the pastures are starting to run out a little earlier.”

Anderson expects activity at the auction yards to start picking up again around the second or third week of August.

Chances are slim that producers could see higher prices in the fall and actually manage to make a profit, Anderson said.

“If we get rain or something that might salvage the feed crop, but that’s going to be the only hope that they’ve got to make some money,” he said.

Producers who contracted early are likely to see higher prices than currently offered at the auctions.

During the week the demand for cattle was coming from a variety of different places, and wasn’t very strong because it’s a slow time of year with not enough cattle to make up big loads, Anderson said.

“For the butcher cattle it’s always the same three or four players and as far as the feeder cattle, it was the same guys as last week,” he said. “There wasn’t a lot of local support because there’s not a lot of numbers for them to do anything with.”

About the author

Columnist

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

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