Despite almost 16 months of uncertainty in the beef business, optimism is still forcing prices higher than many people believed they’d be at this time of year.
“In the past two months the market has jumped significantly,” said Jason Danard, with the Calgary Stockyards.
“Yearlings and calves are trading at much stronger levels than most anticipated.”
For the week ending Sept. 17, fed steer prices in Alberta averaged $80.37 per hundredweight, up from $65.06 a month earlier. Feeder steers in the 600-700 pound range were $93.96 per cwt. for the week ending Sept. 17, compared to $86.89 a month earlier.
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While prices are still much below last year’s, when cattle producers anticipated a border opening, they are increasing because of a belief producers may be able to pencil out a profit.
“They’re buying at levels that hopefully they can make money regardless of what happens with the border,” said Danard.
He said there is a glimmer of a profit if fat cattle remain at 80 cents per lb. and not the 50 cents people were expecting this fall.
“We’re at much higher levels than most anticipated right now. The fats are higher than we thought they’d be.”
The combination of a positive fat cattle market, cheaper feed prices, new investors and American money is pushing prices higher.
Danard said he’s unsure how much American money is fuelling the market, but he believes there’s “quite a bit.”
One American buyer told him that there is a better chance of making money feeding cattle in Canada than in the United States because of its high feeder cattle prices.
Edmonton-based market analyst Herb Lock pointed to a shortage of fat cattle and the uncertainty around the latest government BSE program as reasons cattle prices have moved higher in recent weeks. Few producers wanted to sell cattle before details of the aid program were announced.
“There was a lot of speculation in regards to the program,” said Lock, who added that uncertainty drove prices higher, especially for the lighter calves.
A shortage of yearlings on the market also helped the upward trend. On Sept. 17, some 1,000 lb. steers sold for 85 cents a lb.
“That’s pretty good coin.”
Lock believes higher fat cattle prices are simply caused by a shortage of supply at the packers.
“It can only be a relatively tight supply situation,” said Lock, who expects a glut of cattle to come to market in December. That’s also when he expects the first government set-aside program to kick in.
Those set-aside cattle will not be sold until February when other fall calves on feed will hit the market, creating a larger problem, he said.
“We’re setting ourselves up for a tidal wave. We know not what the implications are when it comes to shore,” said Lock.
