Beef and cattle markets south of the border started the year off steady and on solid footing, which is good news at the wholesale level. Does this steady market offer a suggestion of what’s to come?
For this first Beef Market Update of 2023, Anne Wasko, of the Gateway Livestock Exchange, joins Shaun Haney to discuss what’s happened with prices over the holidays, where cutout prices are headed, and what factors are top of mind at this point in the cattle cycle.
Carcass weights at Canadian processors are finally starting to come down, which is a good signal that we’re finally moving through some big beef supplies, Wasko says.
“The last report that just came out a 17 pound decline from the previous week, and we’re down 34 pounds from those big weights I was talking about in late October, early November…we are finally getting through some of these big heavy cattle that got so backed up in the fourth quarter. And I’m not going to say it all cleans up overnight. But this is the trail to recovery, in my opinion.” (Story continues below)
Looking at export numbers, November feeder and fat cattle numbers climbed yet again. “(There were) lots of cows coming to market as we all know, and we saw a 17 per cent increase of cows heading south. It’s been a long time since we sent 23,000 cows to the U.S. in one month. And that’s what happened in November,” Wasko says.
For the year head, Wasko says there are some good things in the works for the market, and a few key things to watch — nearly all of which are tied to weather.
“Both the U.S. and here in Canada will be looking at smaller beef supplies in 2023. That’s an absolute for sure. So that in a nutshell is going to continue to lead to these higher prices that we’re we’re in the transition to right now,” Wasko says. “We’ve already seen a significant recovery in leverage in the US, and we’re going to see that happen in Western Canada. That’s going to happen in the first half of this year.
The other good news piece is really strong beef demand. Even with all the challenge of ’22, demand increased 3.8 per cent over 2021. That’s the highest we’ve seen since 1988, Wasko says.
Weather, especially wide-spread and severe drought, is a definite worry point for the industry going forward. Half of the U.S. cow herd is in a dry or drought zone, and there are still very, very dry areas of Western Canada, and that puts not only pressure on feed prices, but also on feed supplies, which leads to fewer retained heifers, compounding tight supply in a few years. Interest rates and inflation factor in to profitability at every link in the supply chain, too.