Beef Market Update: Extreme cold, escalating feed costs, and a tightening beef supply

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When it comes to the Canadian cattle industry, 2022 may not be quiet as reviled as 2021 and its extreme drought, but it’s unlikely to rank in the top five best years for many.

While the year definitely shows well in the cattle prices category, it’s the profit and loss statement that really tells the tale, and as Anne Wasko with the Gateway Livestock Exchange explains, those solid prices were eroded by high feed costs, drought, interest rates, and inflation.

Looking ahead, the only real way to deal with short forage supplies is rain, which no one can deliver, but there are some factors playing out in the beef supply chain that could be supportive of prices in to 2023.

“I personally think the story for 2023 is, ‘Is North America going to be short on beef supplies?’ We’ve been watching the cow herd in both countries reduced because of the drought, pretty substantially,” Wasko says.

In 2022, the U.S. is going to mark down the biggest beef cow killing rate ever. That means a smaller cow herd, smaller calf crops, smaller beef production โ€” and at the end that’s hugely supportive to prices. The U.S., she says, is estimating 700,000 fewer fed cattle in the slaughter mix for 2023.

When looking at exports, we are coming up to the one-year anniversary of China shutting its market to Canadian beef over an atypical BSE case. Wasko says the market did a great job of not missing a beat โ€” beef flowed to other countries easily. It really shows why market diversification is so important, she says.

Coming back home, the December 1 cattle-on-feed report from Canfax showed fewer cattle than a year ago, but still five per cent more than the five-year average. That continues to drag on Canadian packers getting current. The report, Wasko says, has some friendly signs, but isn’t necessarily a bullish report.

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