Sector’s profitable streak helpful for flood recovery

Activity at cattle auction yards across Manitoba was somewhat subdued during the week ended April 6, with a number of facilities taking the week off ahead of the Easter long weekend.

For what was traded, prices held relatively firm on lighter-weight cattle, with demand from eastern and western feedlots continuing to provide support.

However, recent declines in the U.S. feeder and slaughter markets would indicate that the highs may be in for the time being in Manitoba as well. Some of the weakness in the U.S. over the past few weeks was tied to the uproar among U.S. consumers over “pink slime” in ground beef.

Also known as “lean finely textured beef,” the product basically consists of finely ground trimmings and connective tissue that have been processed and then treated with ammonia to remove bacteria. While the “pink slime” is used extensively in the U.S., the product is not used in Canadian ground beef, according to information from industry association Canada Beef.

While consumer concerns over additives in ground beef may remain in the background, an early start to the summer barbecue season in Manitoba has cattle producers in the province looking to more positives than negatives this year.

“There is certainly some optimism in renewal, and in rebuilding herds a little bit,” said Ray Armbruster, president of the Manitoba Cattle Producers Association, noting producers were retaining more heifers and also looking to bring in replacement animals.

However, there are still concerns in those areas which were devastated a year ago by excessive moisture, and he said it was a priority for the industry to get those producers back in business.

As far as production and prices are concerned, “we’re in the most positive position we’ve been in, in a long time,” said Armbruster. Most cow-calf producers, which represent the largest segment of the cattle sector in the province, should be seeing profits in the current market given the strong prices.

The relatively strong cattle prices come at a time when feed costs are also expensive. Armbruster said feedlots were still showing good demand for the time being, but their profit margins are tightening as feed costs rise.

Barley bids in the key Lethbridge “Feedlot Alley” have increased by $8-$10 per tonne over the past few weeks.

While feed supplies are generally sufficient in Manitoba, rising prices are starting to become a bit of a concern here as well. As a result, the early spring is expected to see many animals go out to pasture a little sooner than normal this year.

Generally speaking, pasture conditions have improved across the province considerably over the winter, but those areas that were completely saturated a year ago will still need time to get back into production, said Armbruster.

“The flood is over, but the recovery for those guys isn’t,” he said, noting the MCPA was still working with the provincial government to help those most affected.

The full extent of damage to flooded-out land around Lake Manitoba is still unknown. However, while the recovery in the region will likely take a number of years, the current profitability of the sector does provide a good opportunity to begin that process.

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Phil Franz-Warkentin - MarketsFarm

Phil Franz-Warkentin writes for MarketsFarm specializing in grain and commodity market reporting.

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