Record high prices have rewarded beef producers nearly every week this year, but like a roulette wheel, who knows where it might stop?
Last week, cattle analysis firm Canfax reported Alberta average steer prices were $115.56 per hundredweight, up $22.85 over the same period last year. Heifers were not far behind at $114.16 cwt. Good quality cows ranged from $70-$87 per cwt.
United States cattle futures hit a record March 30 at $120.80 per cwt. for finished cattle and feeders closed at $133.55 while the cash trade saw packers trading up to $125 per cwt.
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For Alberta cattle feeder Doug Price those prices end a decade of uncertainty and red ink on the balance sheet.
“We’re quite excited. Everything is profitable right now,” said Price, who is president of the Alberta Cattle Feeders Association.
“When the market goes up like this, it looks like we are going to get into the black again and everybody is going to make some money. On the other side, the cost to replace the cattle is going up also,” he said.
With a shrinking cow herd, the supply of feeder calves is dropping and bidding could be fierce.
“We have lost so many cows that we’re going to have a shortage of beef supply and we’ll have pretty high markets, but if you look back it is just getting us back to pre-BSE (prices),” he said.
“Everybody thinks this is really high, but really, it’s not.”
Market analysts have given up trying to forecast where it might end, said Brian Perillat, manager of Canfax.
“We are into new territory and it is hard to know where we are going,” he said.
There are expected to be fewer calves available for fall placements and there is no sense as to whether producers will start to hold back heifers to rebuild their herds.
Feedlot placements are down eight percent from last year and that does not take this year’s smaller calf crop into consideration.
“If we have a crazy fall and huge, crazy prices, how many of these heifers are going to live long enough to have a calf, or get pulled into a feedlot?”
With fewer finished animals available, packers are running four-day work weeks because they do not have enough cattle.
“These prices are pulling cattle out. We are seeing some lighter cattle, green calves that aren’t quite ready for slaughter but they are getting sold because they are profitable,” Perillat said.
With such unpredictability, producers should try and lock in some contracts.
Good money earlier in the season encouraged some to lock in, but the cash market has already exceeded their contracted prices.
The U.S. is facing similar market frenzy where all commodities are on fire, said Kevin Good at Cattlefax, an American cattle market forecaster.
“There is a lot of investment money coming in and pushing the futures market that is helping support the higher prices. You’d have to say tight supplies, better demand, especially globally, and that extra bump from speculative commodity investment (are responsible),” he said.
He said he expected some market resistance to show up soon and when that occurs, producers better have some market protection through contracts, options or hedging.
