OTTAWA — Fewer cattle are being sold in the cash market, making price discovery elusive.
A task force was formed last summer to come up with new ways to gather price information because the majority of live animals are sold on a contract or other pricing formula.
Mandatory reporting, purchasing sales data or delayed weekly reporting were among the ideas proposed at the Canadian Cattlemen’s Association annual meeting in Ottawa March 8-10.
The information is needed for farm programs such as the Western Livestock Price Insurance Program, which relies on Canfax weekly reports.
Read Also
Beef check-off collection system aligns across the country
A single and aligned check-off collection system based on where producers live makes the system equal said Chad Ross, Saskatchewan Cattle Association chair.
A cash price is needed as a reference even if producers sell cattle on a contract.
“Whether they are using the CME (Chicago Mercantile Exchange) or a forward contract or a formula, all of those need a cash price. They need a cash price in the CME in order to have convergence in the cash and the futures,” said Brenna Grant of Canfax. “Every tool we use today is connected to the cash market in some way.”
There were more cash transactions in 2016 where the open market was at a premium to the futures, but that is not necessarily a trend, she told the domestic agriculture committee at the annual meeting.
In Western Canada, feedlots report transactions to Canfax with figures on their cash trade, formulas or contracts, but this is done on a confidential basis. Other prices are gathered on a voluntary basis, but some weeks there is no cash trade and other times the information is spotty.
The United States faces a similar problem, and the fed cattle ex-change was created through Superior Livestock, in which four major packers and feedlots have committed to participate weekly.
Canada is able to collect some information from electronic markets such as TEAM and DLMS.
The exchange is not viable in Canada when there are only two major packers.
Feedlot owners agree on a need for more cash data, but many were reluctant to participate.
“They were all gung ho to get the reports, but nobody wants to give the information out,” said Bryan Thiessen of Alberta.
Some incentives may be required to get the information, and one of the options proposed is buying the data, although it would be costly.
