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Strength in beef demand, futures supports prices

More U.S. cattle coming to market could add pressure

Cattle prices at Manitoba auction marts remained surprisingly strong for the week ended Oct. 20 as higher U.S. futures prices and steady demand elevated prices across the board.

Bids for feeder steers (300-400 lbs.) were up roughly $5 per hundredweight, with top-quality feeders attracting strong bids.

The heavier-weight animals also attracted solid interest. Steers (700-800 lbs.) were steady to slightly higher while heifers (500-600 lbs.) were generally up $3-$5/cwt.

On the slaughter side, butcher cattle were steady to a dollar higher while yearlings were chopping around a bit.

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“When the force is with you, the force is with you; things are very strong,” said Herb Lock of Farm$ense Marketing in Edmonton.

The rise is a welcome surprise for many in the industry, he said, as the month of October usually sees a slowdown in buying. “To have higher feed cattle and calf prices in October is unusual to say the least.”

One of the theories about why the market is so strong has to do with the world economy, Lock added. Inflation in North America is relatively low, while some stock indexes such as the Dow Jones have broken all-time highs.

People tend to buy beef when things are good, Lock said, and that is reflected in the bullish action in the Chicago Mercantile Exchange.

“U.S. futures are up,” he said. “They’ve come off five to seven cents in the past two weeks but the packers are making money so they’re buying cattle like it’s going out of style.”

The fat cattle market appears to have put in its lows back in August, he added.

“With higher supplies the market isn’t supposed to be in rally mode,” he said. “But it is, so we’re good to go.”

Going forward, he said, the market is also likely headed into bigger volumes. Lock estimated the number of animals, particularly calves, in the cash feeder market will likely double in the next couple of weeks.

He also estimated more U.S. cattle will head to market, which means prices could soon be under a bit of pressure.

“South of the border, you have a million more calves to come to market this fall, which is a little bit on the bearish side,” he said.

Friday’s Cattle on Feed report from the U.S. Department of Agriculture appears to back that up. The agency said the number of cattle placed in feedlots in September was 13 per cent higher than the same time last year.

About the author

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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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