Cattle market could be due for setback, analyst says

(Photo courtesy Canada Beef Inc.)

CNS Canada — Record-high cattle prices, tight feeder supplies and tonnes of producer optimism are causing concern for one Alberta market analyst who believes the market may be due for a setback.

Errol Anderson of Pro Market Communications in Calgary said market conditions are so heated right now, he’s hearing talk feeder cattle could be headed toward US$200 per hundredweight (cwt) in the U.S.

“Nobody wants to talk about this because everybody’s making good money, a lot of people have invested a lot of money into these replacement cattle now, but to me there’s a degree of danger in the market right now,” he said.

Anderson warned a time could be approaching when profitability at the packer level, particularly in the U.S., is not good.

“There’s pushing and shoving going on, so that’s a precursor to a correction.”

Consumers, he added, will ultimately have a major influence on when the market cools. Steaks are getting pricier at the supermarket and soon hamburger could be a much more attractive option for families, he said.

“I’m just highlighting that there’s a risk of a pullback, but the thing is, I don’t know when; it could be three or four months from now or it could be next week.”

However, Anne Wasko, a market analyst for Gateway Livestock Exchange at Taber, Alta., said she believes high prices will be around for a while.

“We’re just on the verge right now of stronger calf prices… last fall’s calf crop wasn’t anything significant to write home about from a profit perspective but this one will be.”

Buying replacement animals right now would likely be a pricier move for producers than simply retaining heifers, she said.

“More proteins”

Robust wholesale prices in 2014 were largely responsible for the success in the supply chain, said Wasko, adding they enabled everyone to make money. Things may start to change for meat packers once significant price hikes start to get passed on to the consumer.

“As we start to grow our numbers we’ll build supply back up, pork and poultry, the other proteins kind of fit in the same basket together. We’re going to see growth in those two sectors as well. So there will be more proteins available and that will put a top on the prices.”

Despite the current situation, she added, the market will still see ebbs and flows as in any other year.

“Things are still cyclical and you’re going to have good prices during the year and you’re going to have low prices during the year.”

— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

 

About the author

Glacier FarmMedia Feed

GFM Network News

Glacier FarmMedia, a division of Glacier Media, is Canada's largest publisher of agricultural news in print and online.

Comments

explore

Stories from our other publications