Beef Market Update: Market remains strong despite weak basis

If you’ve been watching live cattle futures, you know there is some significant strength making an appearance.

The Chicago Mercantile Exchange (CME) has been hitting new contract highs when it comes to live cattle futures — signalling strong demand and prices for cattle feeders in the United States. However, as Anne Wasko of the Gateway Livestock Exchange explains in this episode of the Beef Market Update, the basis in Western Canada has “fallen on its nose”.

The weak basis could be partly due to increased cow slaughter reducing space for young cattle at packing plants, explains Wasko. As well, packer processing rates have also slowed slightly from last year. Meanwhile, auction mart volumes are up significantly year-over-year, with internet sales up 46 per cent from 2022, indicating a possible turn to producers utilizing more different methods to market their cattle.

A look at cattle feeder activity so far, imports and exports, beef trade volumes, and more, in the episode of Beef Market Update, below:

SUMMARY:

• U.S. so far is pretty quiet
• Live cattle contracts have been making some noise though — the futures market in Chicago has hit new contract highs this week
• The cattle feeder in the U.S. is certainly watching that very closely, and saying hey, have you checked out these futures markets lately
• Haven’t seen much trade due to these high futures prices — there’s a bit of a standoff
• The choice cut out did close down from $5
• Typically takes us until we get into the fourth quarter of the year to really see that cut out starting to show its colours for the holiday season
• Taking a pretty typical breather there
• Local dress trade is steady to a buck higher than last week
• In Western Canada we still have a very weak basis
• The market had seen a weak basis to start off 2023, then it have kind of improved, and then we got into the May/June. As we’ve gone through the rest of the summer, especially here in August and September, basis has kind of fallen on its nose
• Auction market volumes in Alberta are up 51 per cent from last year, but still down five per cent from the 2021 drought
• Internet volumes are up 46 per cent from ’22
• Feeder cattle imports from the U.S. continue to run at an elevated pace, but exports are running at half of last year’s pace

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