BANFF, Alta. – Too much beef in the marketplace is holding cash prices at lower than anticipated levels.
The North American market has near-record amounts of beef to eat in the next couple of months, said industry analysts at the Alberta Cattle Feeders Association convention held here Feb. 27.
Beef production is above the five-year average, said both Randy Blach of Cattlefax, an American market analysis firm and Anne Dunford of Canfax, the market analysis arm of the Canadian Cattlemen’s Association. There are also growing mountains of pork and poultry available to consumers.
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“We’ve got an awful lot of meat to absorb in the next 60 days,” said Blach.
Unseasonably high carcass weights in Canada added eight percent more beef than was forecast, said Dunford. For the first two months of this year there were 348 million pounds of beef available, compared to 326 million lb. for the same period in 1997.
Canadian steer weights are above average. Last week, steers were averaging more than 800 lb. compared to last year’s more manageable 766 lb. Heifers have been maintaining weight at around 736 lb. compared to 1997’s 698 lb.
Pork production is up about six percent and with the Asian financial crisis, exports have dropped. That pork has stayed at home and crowded out beef.
Feedlot operators are losing money because too many cattle are carried over from one month to the next. There is also a poor swap on feeders, a situation that develops if a fed animal is sold at a loss of $80 a head and is replaced with an animal that cost $1.05 per lb.
“Carryover has as much impact on a 30-day supply of cattle as the placements do,” said Blach.
Stocks are expected to decline in the last half of 1998 after the carryover has moved through the system, putting the markets back in line.
Besides heavy carcasses, extra heifers have been put on feed.
In 1997, Canada killed 54 percent of the heifers, the highest percentage of heifers on feed since the mid 1980s. In 1995, 37 percent of the heifers went to slaughter.
More cows have also been culled. The long-term average is 11 percent cow kill, but in 1996, 13 percent were culled and 1997, 12 percent were killed.
Population decreasing
However, inventory in Canada and the United States is coming down because of the high ratio of females killed.
Two years from now, beef production is expected to drop because more heifers will be retained for breeding.
Total cattle inventory numbers will be at a low this year and should peak again by 2000 or 2001, putting the cattle cycle right on schedule, said Blach. The cycle high was in 1990-91 with lower beef production. The cycle low occurred in 1996 and was made worse by $5 corn that drove up the cost of production.
