Rains, weaker loonie help cattle producers

Chicago August live cattle last week touched contract highs

Rains, weaker loonie help cattle producers

Another week saw another summertime decline in the number of cattle going through the rings at Manitoba auction sites for the week ended June 17.

In total, 2,449 feeders and butchers were sold at auction sites over the week, with only Ashern and Ste. Rose du Lac not conducting sales. That’s down from the 3,107 animals sold during the first full week of June, despite three sites not in operation that week.

As cattle numbers continue to decline, recent rains have improved pasture conditions for grass cattle and the Canadian dollar has dropped more than a cent since the start of the month, giving a boost to cattle producers.

“The rain has helped out, but we’re still not out of the woods,” said Allan Munroe of Killarney Auction Mart. “Most guys have their grass cattle bought. If they think their pastures look a bit better than they were anticipating, they’ll buy a few more. But most guys have that taken care of for now.”

Prices have remained steady, he added, and the volume of butcher cattle remains strong due to dry conditions.

At the Chicago Mercantile Exchange (CME), August live cattle traded at US$121.10 per hundredweight at the end of June 17, just a couple of days after it reached a contract high of US$126.

Meanwhile, CME August feeder cattle traded at US$157.40, a drop of US$2.60 from the day before. The price of the contract had risen by US$13 over the past week.

While demand for feed grains has slowed early in the summer, prices are still more than $2 per bushel higher than last year’s, according to Prairie Ag Hotwire data.

“Fat cattle are not worth as much as they should be based on spot feed prices. If they got up to a realistic level where they should be, then the fat cattle would be worth more (and) the feeder cattle would be worth more,” Munroe said, adding that most cattle are staying in Western Canada and the market in the U.S. is currently “worse” than in Canada.

As for where prices will go over the next few weeks, it will depend on the skies, he said.

“We’re in a weather market. We’re in a drought in the (U.S.) northern Plains and in Western Canada. If we get rain, it will help feed prices and if we don’t, it will make feed prices expensive and it will have detrimental effects on cattle. Same as it always has.”

The provincial and federal governments have advised livestock producers in Manitoba affected by dry pasture can apply for funding through Ag Action Manitoba. To receive funding, eligible pro­jects include new water source development such as constructing new wells or dugouts, renewable energy-powered watering systems, permanent fencing to restrict livestock access to surface water and dugouts, and permanent pipeline development.

“Making this program available will help provide some producers with tools to better manage their water situation in the near term and on a longer-term basis,” Manitoba Beef Producers president Tyler Fulton said in a press release.

“We thank the federal and provincial governments for opening up this program and look forward to continued engagement with them about the effects of the drought conditions and how to mitigate that.”

About the author

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Adam Peleshaty – MarketsFarm

Adam Peleshaty writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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