Canadian cattle inventories continued to shrink at the start of 2021, while U.S. inventories declined slightly from their peak. North American cattle supplies remain ample but could tighten as the year progresses with the potential of a smaller calf crop. Canadian beef production continues to be supported by feeder imports from the U.S. The backlog of cattle due to COVID-19 pandemic-related production interruptions last year has been largely eliminated. Fed cattle prices have improved from year-ago levels but remained below the five-year average. Calf prices rallied contra-seasonally to the highest levels since 2016 for February and March. Rising feed costs are expected to be part of the major headwinds for the cattle market as feed grain prices are pushed to elevated levels by tightening domestic and global grain supplies and China’s strong import demand for feed grains.
The cattle market started the year with a stronger market tone as strong domestic and international meat demand was expected to absorb the extra North American meat production in 2020. At the start of the year, all cattle types were trading higher than the previous year and feedlots were retuning back to profitability after a tougher couple of years in 2018 and 2019.Livestock Price Insurance (LPI) strives to capture and provide producers with as much of the cash market sales as possible. Weekly reporting of cash prices by producers will directly benefit settlement calculations while contributing to the program sustainability. All data reported is confidential and analyzed for program enhancements specific to the LPI program.
Beef production in 2020 was down 1.6 per cent from 2019, but still 23 per cent higher than the 2015 low. Fed production was steady with last year, while non-fed production was down almost 10 per cent. Canadian steer carcass weights averaged 917 pounds, eight pounds heavier than 2019, but were still two pounds below the record high set in 2016. In the first quarter of 2021, year-to-date beef production was up 12 per cent from a year ago, with slaughter up nine per cent and carcass weight up two per cent. As the backlog of cattle has been largely eliminated, fed cattle supplies may tighten moving forward as cattle-on-feed inventory have been below year-ago levels from October 2020 through March 2021. Longer term, beef production could be spurred by demand in the foodservice sector once the economy reopens.
For over 50 years, Canfax has provided expert analysis of markets and trends in the ever changing North American beef industry. In this new millennium, cattlemen, feedlot managers, and agri-business professionals will continue to rely on up-to-the-minute information as an essential tool for maximizing profit in today’s beef sector. Whether your operation needs to plan for three hours or three years into the future, Canfax delivers timely, accurate information for 21st Century cattle industry professionals.
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Alberta direct cattle sales Thursday saw light trade develop with dressed sales ranging from 264.00-265.00 delivered, fully steady with prices seen on Wednesday and steady to 1.00 higher than last week. All three western Canadian packers bought cattle. Cattle that traded this week were being scheduled for the middle to late October delivery. This week’s cash offering has been cleaned up. fed prices have trended mostly sideway over the past month averaging from 156.00-158.00.
The market and supply chain issues caused by COVID-19 have weighed on the cattle markets this year. The fed cattle market has been hardest hit with limited processing capacity and an abundance of slaughter cattle available for processing. The second quarter saw extreme volatility for fed prices as only limited numbers of cattle were trading on the cash markets given production uncertainties. Alberta fed steer prices ranged between $107/cwt and $149/cwt in the second quarter before prices leveled of in the mid $130’s/cwt through the second half of the year. In the second half of this year, Alberta fed prices averaged at the lowest level since 2013. The Ontario fed market faired better than Alberta, as they did not have the processing issues this spring that the west had. Ontario fed prices have been higher than Alberta since the second quarter and have generally been above a year ago as well.