Beef Market Update: Wide basis shaving dollars off local market cattle

Despite last Friday’s bullish Cattle on Feed report out of the U.S., markets on Monday opened with little impact, says Anne Wasko of the Gateway Livestock Exchange, in today’s Beef Market Update.

The report listed the May 1 inventory of cattle and calves on feed for the slaughter market as the highest since the series began in 1996. For feedlots with 1000 or more animals, inventory was up 2 per cent compared to May 1, 2018, totalling 11.8 million head. Placements in feedlots during April were 9 per cent above 2018 (at 1.84 million head), and marketing of fed cattle in the same month came in at 7 per cent higher than 2018 (for a total of 1.93 million head).

“In hindsight they actually sold more than they placed, and the report was, from a technical perspective, bullish,” says Wasko, adding that other factors – like the grain complex – took centre stage for Monday’s open.

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Meanwhile, the August live cattle futures chart has seen dramatic change since spring, with its trendline described by host – and southern Alberta resident – Shaun Haney as a “Head-Smashed-In-Buffalo Pattern.”

On April 17, futures for August contracts hovered around $120 U.S., today they’re closer to $105 U.S. Though Wasko concedes current numbers make more sense in terms of supply, she also hopes some producers were able to take advantage of those high prices.

And let’s not overlook this year’s wider basis as a player in producers’ bottom line.

“Here we are today looking at our spot basis of what our Alberta market is vis-à-vis the Nebraska market – we’re trading $10 CDN under,” says Wasko. “A year ago, it was one over. So do some quick math: $11 a hundred change to the negative, times a 14 weight steer, there’s $150 taken off our local market in terms of basis alone.”

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