Cattle markets have turned around and have shown signs of improvement in recent months as prices hit six-year highs.
Cattle Market Analyst at Gateway Livestock, Anne Wasko, says supply is tightening, cattle feeders are becoming more relevant and the number of cattle being fed is down three percent compared to last year.
“Beef prices are going up. The fed cattle markets are leading the way, gaining over $180 on average last week and this is the first time we’ve seen fat cattle average like this in Western Canada since 2015. And, therefore, no beef cattle and calf prices will follow.”
She notes that the slaughter cow market has been super strong this year, well ahead of last year, averaging nearly $40 CWT higher than last year.
“It’s still in that $113-$115 range at the D2 average and is again the highest slaughter cow price we’ve seen for this time of year since 2015.”
According to Wasko, a key factor in the price increase for the slaughter cow market now is due to the drought and larger cow markets we have seen in 2021.
She says if we focus on this slaughter market we are still seeing very dry conditions in the deep southern plains so we have a 14 percent increase in US cow deaths.
“It hasn’t affected prices (certainly north of the border) and their prices are still above the level of a year ago, which just shows the demand for mostly lean meat (the hamburger beef) that’s happening here in the year 2022 was super strong.”
Livestock markets were quiet in June and July, but things picked up again in August, especially at the grass cattle market.
“Things are really starting to rock here in early September, especially on the web and with video sales offering sales delivery into the fall. So those prices are already visible, $40-$60-$100 higher than last year. You know both from yearlings and calves even better.
I think a couple of things on the face of it, we’re seeing barley prices in southern Alberta 15 percent lower than the same time last year. We’ll watch that for the rest of the run. Remember that last year a record amount of corn was imported into western Canada from the US. So this looks like a significantly different scenario, at least in terms of forage input in parts of western Canada, and that’s going to be important. The other point is that the supply of forage cattle looks very tight. We have become a net exporter of forage cattle here again in 2022. We export more and import less feed cattle than last year. “
She notes that this helps keep the feeder supply fairly tight.
Statistics Canada recently released its report — the first report after its five-year census report, which came out in May.
According to Wasko, the new report only confirms the trend we’ve seen over the past few years of Canada’s cow herd shrinking.
“Bottom line, if you look at the big picture, total cattle numbers here in Canada are down three percent from 2021 to 12.3 million head, the smallest herd of cattle in Canada since 1988. If you look at suckler, beef cow numbers, they’re up two percent 3.7 million units dropped.”
The report also resulted in a seven percent decline in Western Canada beef replacement heifers from a year earlier, making them the smallest replacement herd since 2010.
She says if you think this through logically that will basically include the fact that next year we will see a smaller herd of cows again when our reserve heifers are already down.
Wasko warns that there is still a lot of volatility out there.
“I mean, global issues continue to cause a lot of volatility in daily prices, whether you’re talking about energy prices or grain prices. So I mean it’s not like it’s going to be smooth sailing. Unfortunately, we have so much volatility ahead of us. But we are looking at 2023 cattle price futures markets in Chicago as strong and higher than they have been in many years.”
Based on the numbers and current indicators, she sees plenty of confidence going into the fall run and into 2023, with the expectation that cattle prices will be a bit firmer next year.
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