Beef Market Update: Futures markets looking for direction as fall run winds down

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On the verge of winter, ranchers are in full winter prep mode, feedlots are full, and Canadian packers are going at full steam. Cash markets, however, are a little light on action, and to talk about what that’s about, RealAg Radio host Shaun Haney checks in with Anne Wasko, with Gateway Livestock Exchange.

In this edition of the Beef Market Update, Wasko and Haney start with the cash market, that’s in wait-and-see mode, as bids were light and lower. “Feedlots are looking for a little more information before they’ll move much,” Wasko says, and that’s got futures somewhat stalled while the market looks for that direction cue from the cash trade.

Moving to cattle movement and local markets, Wasko says that carcass weights are steady indicating that feedlots are staying current. Where we have seen a pull back is in the spot basis — the spread between the local and U.S. price. It’s moved from $5 over to $6 under now, which is a pretty big swing, Wasko says.

“Cattle feeders had a schedule, and packers have been running full out, with good cattle movement. That hasn’t all changed, but the supply picture is shifting higher,” Wasko says, and that is taking some of the leverage out of the hands of feedlots, for sure.

Moving to the fall run, Haney and Wasko talk rancher profitability. Generally speaking, it’s been a solid, fall run, but we’re experiencing a seasonal pull back now. It’s not unexpected, but certainly does eat in to profits.

Moving to the latest stats on Canadian live cattle exports, total cattle numbers to the U.S. are down 30%, but we did see more slaughter cows and feeder cattle move south. The biggest drop has been on fed cattle, which have stayed in Canada as processors here are running at a good clip to process more cattle here at home.

There are also yield grading changes coming, as Canada is moving from three grades to five grades, inline with U.S system. We move so many cattle between the two countries, this will make it easier to compare apples to apples (steaks to steaks?), and should offer some more precise feedback to the supply chain.

Hear Anne Wasko and Shaun Haney below:

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