CNS Canada –– Increased competition from pork and poultry may be the factors that ultimately stop skyrocketing beef prices across North America, according to one cattle market analyst.
“We’ve had a phenomenal year of demand for beef and prices have been record-high right through the whole pipeline so the question we’re all asking now is ‘how much farther along can we see these prices sustained at these levels?'” said Anne Wasko of Gateway Livestock Exchange at Taber, Alta.
Prices for 300- to 400-pound feeder steers in Manitoba last week climbed as high as $462 per hundredweight (cwt). Similar trends are being seen in other areas too. Steers at 700 to 800 lbs. in both Alberta and Ontario ranged between $225 to $259, according to market reports on Prairie Ag Hotwire.
“It’s right across the continent and there’s record-high prices in the U.S. as well,” said Wasko.
The feed supply and the lower loonie have also recently favoured cattle producers, she said.
“No question about it: Record U.S. corn crop, large supplies of feed grain on both sides of the border; the weak Canadian dollar is icing on the cake,” she said.
The price action also stems from a lack of sufficient volume to address demand, she said. The Canadian herd has been getting smaller for some time and only recently stabilized, said Wasko.
“But our price indications are coming out of the U.S. and the shortages there.”
The U.S. herd is still feeling the effects of the big sell-off following the droughts of 2011 and 2012, said Wasko, noting it will be a difficult situation to rectify in the near term.
“We didn’t get here overnight and you don’t increase the herd overnight,” said Wasko.
How long prices can remain this high or higher will likely depend on competition from other protein sources, she said.
“I suspect more competition could, as we get out into 2015, put a lid on where we’re seeing current beef prices,” she said.
The U.S. Department of Agriculture recently raised the commercial pork production forecast for 2015 to 23.9 billion pounds. This is expected to bump up supply, which was significantly impacted by the porcine epidemic diarrhea virus (PEDv) that resulted in the death of eight million pigs since May 2013.
Going forward, most analysts expect the record corn harvest will enable producers to feed hogs heavier, which should increase tonnage and overall production.
— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.