RED DEER – Prices for fat steers in the United States hit a record high yesterday.
Live Texas steers sold for $111 per hundredweight and Nebraska fats fetched $112, yielding a profit of around $50.
However, Duane Lenz of the U.S. market analysis firm Cattlefax said it’s unlikely those prices can be sustained.
“Cattle we are placing today can’t do that because we bought corn lower and we bought the cattle lower,” he said in an interview during the Alberta Beef Industry conference held in Red Deer Feb. 23-25.
“Our breakevens are going to go higher every month.”
For the last 10 years, U.S. steers sold in the $58-82 per cwt. range. Prices this year could exceed $115, but Lenz said forecasters are too nervous to commit themselves beyond that because of the volatility in the market.
While Canadian market conditions are as volatile as those in the United States, a feeding advantage prevails here because barley is much cheaper than U.S. corn, said Brian Perillat of Canfax.
How long that advantage might remain is unknown.
“Day to day you could wake up one morning and your cattle could be up $30 or $30 down,” said Perillat.
Demand in Canada and the U.S. has remained flat, but export markets have been greedy for North American beef.
Compared to this time last year, U.S. beef exports are up 32 percent with the most expansion into Asia.
The Canada Beef Export Federation reported beef exports to Asia, Mexico and Russia increased 17 percent in 2010 as compared to a four percent decrease in exports to the U.S.
Total Canadian beef exports to these markets jumped from 90,050 tonnes worth $327 million in 2009 to 105,700 tonnes valued at $426 million in 2010.
