Fall run was satisfactory with calf prices surpassing $2 a pound for steers, but feedlots continue to struggle with losses
Demand for Canadian beef is strong at home and abroad.
Overall, the fall run was satisfactory with calf prices surpassing $2 a pound for steers but feedlots continue to struggle with losses. However, packers are posting strong results.
“I think we came through most of the fall run in pretty decent shape. Overall, I think producers were satisfied with their prices,” said Brian Perillat, senior market analyst at Canfax.
Since 2017, Alberta cattle prices have traded in the $210 to $230 per hundredweight range for 550 pound steers. A lot of feedlots have break-even levels of about $150 per cwt. for most of the fall, so losses are averaging $200 to $300 per head in that sector.
The fed market was further disrupted when a major fire swept through a beef plant in Holocombe, Kansas. The plant was one of the largest in the United States, handling 5,500 to 6,000 head per day. The plant started to kill again the week of Dec. 2 at a rate of about 2,000 per day and should be fully operational in the New Year.
There is no growth in sight and the Canadian cow herd is at its lowest level in 30 years but beef production is increasing by seven percent year over year. Demand for the product is strong, supported by record export values.
Cows continue to be killed and heifer calves were placed on feed when was grass was scarce in late spring.
“Since the 2015 low, Canadian beef production has grown 30 percent. That is actually double the rate than the U.S.,” he said at the Alberta Beef Producers annual meeting in Calgary Dec. 2-4.
There has been some growth in the feedlot sector and packers are running at close to capacity. Cattle tend to stay at home rather than being exported, and imports of U.S. calves continues. Most are dairy calves but some beef animals are also showing up in southern Alberta feedlots.
Last year’s harsh winter affected cattle growth, and feed prices were higher due to shortages.
The feed supply situation has improved across Western Canada.
Feed prices are related to what feedlots are willing to pay for calves.
Lethbridge barley is around $230 to $240 per tonne. If barley prices go up $20 per tonne, that lowers calf prices by 10 cents a lb.
On the export side, volume is up 20 percent over last year. About 70 percent of Canadian beef is destined for the U.S. but Mexico, Japan, South Korea, Hong Kong are strong buyers.
Canada is back in the Chinese market after a four-month dispute.
Chinese beef imports are growing exponentially even before African swine fever killed about half the hog herd. The disease is also appearing in other southeast Asian countries like Vietnam and Philippines.
“China has almost half of the pigs in the world and if they are talking of losing 40 to 50 percent of the hogs in their country, it is a quarter of the pigs wiped off the planet,” Perillat said.
In response, global beef prices are increasing and places like Australia, New Zealand and South America are moving in to fill the meat void. China is importing eggs, milk and meat at record levels.
“There is not enough meat in the world to offset the pork gap in China. Their meat consumption is going to have to go down,” he said.