Many cattle feeders may be describing this year as one of the most disappointing cash markets they’ve seen in a long time, especially given the demand that is out there right now.
“Stuck” is the word host Shaun Haney is using to describe it, while Anne Wasko of the Gateway Livestock Exchange is using “frustrating” and “disappointing.”
Whatever words you are using, they likely aren’t good.
In the U.S., we’ve finished the seventh straight week of the market being in that flat transition period — with another week at $114.
“Normally by now we are heading into a spring high. And don’t forget a month ago, the April live cattle futures told us that this market is going to get better. It peaked at $126.70 and here we are at $117 today for April,” Wasko says. “It’s very frustrating.”
As the futures have come down to cash, and with some of the prices of feeder cattle at certain points in the intake, breakeven is just not in the favour of the feedyard yet again. (Story continues below video)
As Wasko notes, we’ve got to get through this backlog, or the “COVID-19 hangover” in order to really see this market improve for the cattle feeder.
“We knew we had them for the first quarter of this year — whether we are talking in the U.S. or Canada — but we truly have to get them behind us so that leverage can turn to the cattle feeders favour. And it will. But it’s just been frustratingly slow,” she explains.
But what really is that feedyard leverage? What does it take for that tide to turn — what needs to transpire for that to happen? As Wasko explains, another way to look at it is your bargaining power.
“It’s supply or demand. We’ve talked about it — and it’s not the demand piece. The demand for beef in both of our countries continues to be absolutely outstanding. So that’s not the piece,” Wasko notes. “This time for sure it’s that COVID hangover of cattle that we’ve really got to put clearly behind us. And certainly as we go through 2021, those numbers do come in our favour.”