Beef Market Update: U.S. cutout price signals continued rise in demand

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It’s been the story for weeks, but unfortunately, still a big one — there are large parts of the country that are facing drought, and it is severely impacting the beef industry.

Seeing as this is the Beef Market Update, it wouldn’t be natural if we didn’t talk the price side of all of this as well.

Anne Wasko of the Gateway Livestock Exchange says there is still some solid news on the U.S. cash prices.

“They were up a dollar in the south — $121 to $122, and northern prices were up two to three dollars — $124-$125,” Wasko explains. “The cutout is still good in the U.S., up another $17 this week at $292.50. This is just continuing to tell us that export demand, restaurant demand, and the U.S. economy is continuing to get some wheels under it.”

Locally in Canada, exports are looking a bit more sideways which, as Wasko notes, is a tad discouraging as we watch the U.S. market continue on the rise.

“Usually this is where your summer lows are being put in, and the U.S. market is really holding solid. The Alberta and the Ontario market for that matter are just steady again this week, we’re right around that $150 mark this week in Alberta. That’s $250-$253 dressed, and in Ontario, $258-$260,” she says. “So again, just steady.”

Another part of the drought is an unfortunate early start to fall run, as calves are headed to town already and in some areas, have been for a few weeks now.

“Sales that normally wouldn’t even be operating in the summer due to lack of volume, are running. The live auction markets have been quoting volumes significantly larger — cause usually it’s zero — especially in those hard hit drought areas. Manitoba is reporting big volumes in the Interlake region. It’s an early run all the way around, and it’s not by choice. People aren’t choosing to do this — they are being forced to.”

For the feedyard folks, many are wondering how this will pencil out. The problem in Western Canada lies with the sky-high feed prices.

“We know it’s dismal out there, but how dismal it is or isn’t it in terms of yield? So you’ve got spot feed prices at crazy high levels. I don’t think anyone is suggesting that these numbers work. So I guess the question out there, why have some prices stayed as steady as they have? Is it that optimism that we continue to see in the futures market, from next year (2022), is it some expectation that new crop corn prices are going to be lower than what we are seeing for old crop as the futures indicate?” Wasko questions. “Again, questions and answers there. But on paper — no, those numbers don’t work.”

Check out the full conversation between RealAgriculture’s Shaun Haney and Anne Wasko, below:

 

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