To say the futures market took a bit of a nosedive this week would not be an exaggeration. It has, however, been doing its best to try to recover some of those losses.
Anne Wasko of the Gateway Livestock Exchange says in the latest Beef Market Update that the moves have been very volatile lately.
“If you go back and look at the December and February months, for example, you know dropping on the top of $10 US in the space of nine trading days, and now this week back up $5.5-$6 of that. But at the same time, there are certainly implications on that big of a down, and some of the recoveries that has gone on just this week.”
The cash markets have lowered in response to those movements in the futures, with the U.S. cash market down two dollars last week. They have since made their way to recovery, and as Wasko notes, they are “steady-ish” in the south, but not with much volume.
When it comes to packers, bids were lower, sitting at the $220/cwt dressed, with lifting times into later November and December.
From a cash perspective, we are seeing cattle being put onto the set-aside program in Alberta, and we’ve seen some of the cattle-on-feed reports, so it’s no secret that there are definitely some high weights out there. As Shaun Haney notes, the market is responding as one would expect, based on some of those basic market fundamentals.
“There’s lots of supply. There’s no question about that. Between large processing harvest levels both in the U.S. and here in Canada last week, we had another 59,000 head of fed cattle slaughtered, which is a tremendous number for October. It’s well above where we would’ve been say a year ago. But when you add to our carcass weights in Canada, ours was 961 pounds last week, which is a 24-pound increase from the same week last year. So we are going at an all-time high for this year. That means lots of beef. The same kind of scenario is going on in the U.S. From a supply perspective, there’s lots of beef on the market,” says Wasko, adding that packers are continuing to run at good levels, but still not enough to clear up the numbers.
When there is a bit of volatility in the market, as Wasko emphasizes, obviously the rancher is impacted — and when it comes to bringing your cows to the auction mart, it can become a bit of a game of roulette.
“It’s unfortunate, certainly. The kind of volatility in the live cattle futures market, while at the same time, we’ve got feed costs — with barley prices jumping up the way they have —over the past 4, 5, 6 weeks, can cause some stress. Barley prices are up over 38 per cent, in that time frame,” she says. “Those two things have certainly weighed heavily on the feeder and calf markets in western Canada.”
Check out the full conversation with Anne Wasko, and RealAgriculture’s Shaun Haney, below:
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