CNS Canada — Cattle markets have seen recovery after taking a nosedive in earlier sessions, but prices likely won’t revisit summer highs, according to one analyst.
After hammering sharply lower, Chicago Mercantile Exchange live cattle futures saw recovery on Friday, and extended gains into Monday.
As of 2 p.m. CT on Monday, spot December live cattle futures were trading around $1.41 per pound. That’s about 13 cents off of lows hit at the beginning of October, but still below the summer high of $1.56/lb. (all figures US$).
“They’re lower than they have been,” said Anne Wasko, a market analyst with Gateway Livestock Marketing at Taber, Alta.
“I think we’re all going to look at the summer of 2015 and say ‘those were the ultimate highs for the cattle cycle here in Canada,’ and now we’re adjusting lower.”
Futures haven’t recovered to where they sat before the turbulence, and Wasko doesn’t think they will.
Wasko attributed the sharp declines, in part, to cattle feeders falling behind in their marketing in the U.S. Midwest’s corn belt, and Canadian markets followed.
U.S. cattle were considerably late and overweight for the market.
The bigger the cattle, the more pounds of beef on the market, and Wasko called it “the final straw that broke the camel’s back.”
Wasko also pegged volatility in global markets, naming China as an example, as another factor in the decline.
“This didn’t happen overnight. It’s been slowly happening all through the summer.”
But markets are trying to recover, especially as the U.S. works through its supply glut.
Heading into the fourth quarter, there is some bullish news for futures to ride on.
Wasko said U.S. supplies look smaller moving forward, and sales improve heading toward the holidays.
— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow her at @jade_markus on Twitter.