The prairie cattle market began to collapse as soon as people heard that bovine spongiform encephalopathy had been found in an Alberta cow.
“Within a few seconds of the announcement every order buyer was on the phone, being called by their feedlots,” said Desmond Plewman, manager and auctioneer at Grunthal Auction Mart in Grunthal, Man. About 450 head of cattle were in the auction mart as part of its usual Tuesday sale on May 20.
“They took their cards and threw them in the garbage and resold the cattle they had from the sale and sat and watched for the rest of the day.”
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It happened all across the Prairies. Order buyers for the feedlots pulled back as the U.S. market slammed shut.
Fed cattle became almost impossible to sell – even to Canadian abattoirs. Plewman said most Manitoba abattoirs stopped buying as soon as they discovered that a rendering plant in Winnipeg, which sells much of its product to the U.S., was no longer buying offal.
“It put the kill on hold even for the local guys,” said Plewman.
He planned to open May 27, but doubted whether many cattle would be delivered.
“Everyone’s asking: ‘What’s going to happen?’ I don’t have a clue,” said Plewman.
Nor do market analysts, who say there are too many variables at play to say when farmers will see an active cash market emerge again for their feeder cattle.
“Right now it would be silly to guess,” said Canfax analyst Anne Dunford.
“I have no idea,” said George Morris Centre meat market analyst Kevin Grier.
Fed cattle prices in Western Canada are directly related to the U.S. fed cattle market cash prices, which are collected and published by the United States Department of Agriculture.
Feeder cattle prices are also based on U.S. prices, but their basis varies more because of factors such as feed prices that the feedlots have to pay between taking delivery of feeders and sending them to slaughter.
Fed cattle demand is now only a fraction of its usual size because U.S. slaughter plants are not buying, and Canadian slaughter plants that ship meat to the U.S. and elsewhere need fewer cattle.
Feedlots that cannot move their fed cattle do not want to bring in new feeders.
Manitoba Agriculture analyst Janet Honey said prices for slaughter weight cattle will probably be heavily discounted until the U.S. border is reopened.
But feeder prices will not necessarily stay heavily discounted. Since buyers of feeder cattle have a few months between purchase and delivery, they may bank on the situation returning to normal.
Grier agreed that feeder prices will be firmer than slaughter prices.
“There may be an element of hope that by the time that those animals are ready to be finished that things might be back to normal.”
With the U.S. market ceasing to serve as a benchmark price for prairie cattle, producers will have to listen to their buyers.
“It’s going to be a one-on-one relationship. Cattle feeders are going to be taking their cue from the packers,” said Grier.
Honey said cattle producers are lucky this disaster did not occur during the winter. Cow-calf producers can now put their animals out to pasture and wait for the border to open.
“If it ever had to happen, now is as good a time as possible,” said Honey.
Plewman recommended that sellers watch the auction and pull their cattle out if prices are too low.
