Beef Market Update: Cost of gain rises in step with feeder placements

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When we look at the cost of gain, it’s historically high.

As Anne Wasko of the Gateway Livestock Exchanger explains in our latest Beef Market Update, we have reached record highs for cost of gain — with the second highest year on record being last year.

“We’re in this environment, the last two years, where we’ve never seen feed costs and grain prices in terms of barley or corn at these levels in Western Canada before,” says Wasko. “The previous record [prior to 2021], and this is based on a CanFax breakeven report that they do. In 2013, it was $1.20/pound of gain, and we’re up in the $1.75-plus area today so it blows any previous highs out of the water in terms of what’s going on presently.”

The United States Department of Agriculture (USDA) Prospective Plantings report was released March 31, and in it was an estimation of 4 per cent lower in planted corn acreage year-over-year. If you’re in the feeding sector, you’re hoping for a much higher corn planted number than what was estimated by the USDA. We can only hope that there is still time for that number to increase.

When it comes to cattle on feed, Wasko says we are seeing a similar storyline that we’ve talked about all year: we’re feeding a bunch. Continuing the trend of records, both in the U.S. and Canada we have record, or near record numbers on feed.

“Last week, on the March 1 U.S. Cattle on Feed report, they were up 1 per cent. That’s the highest March 1 bought inventory ever. That’s 3 per cent larger than even the five year average,” says Wasko. “Placements in February in the U.S. were up 9 per cent. The last four out of five months they’ve seen larger placements. So like Western Canada, you’ve got more than half of the U.S. in drought state, and you’ve got placements picking up. I think that’s been a driver in those larger numbers.”

For a comparison perspective, in Western Canada, the March 1 cattle on feed numbers for Alberta and Saskatchewan were up 9 per cent, despite a drop in the three months previous.

“That’s the largest in 20 years.”

Check out the full Beef Market Update, below:

 

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