Beef Market Update – XL Foods Plant Shutdown Creates Significant Basis Risk

With less cattle slaughter capacity in Canada, many ranchers and feedyards are concerned about the possibility for the feeder cattle and live basis to significantly widen.  A basis that gets too wide makes the current Canadian model unworkable.

Currently the live cattle basis sites at 16-18 which is the same as last year at this time.  No reason to panic yet but the concern on the minds of producers right now is basis risk.  This concern is definitely more so than the live futures price.

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Anne Dunford

President of Cattle Trends Inc., which consults for companies and individuals in the cattle business. Also a regular contributor on RealAgriculture.com

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One Comment

martha

They are right … still not the time to panic, but if you need to take precautions. In Colombia, for example when they pass the cost of these eventualities cattle soars very high. Hopefully there will not pass. In http://www.agronet.gov.co docuementos sidewalk can see this problem

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