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Deb’s Outlook – for Apr. 5, 2010

Fed

Typically fed cattle prices peak late in the second quarter or early third, and North American market fundamentals are positive for April and May. But as summer approaches fed prices will come under pressure when the heavier placement patterns we have been watching bring forth an ample supply of market ready cattle. Consumer spending as a measure of improving demand and the soaring dollar must be closely monitored.

Feeder

It’s the time of year when lightweight cattle continue to strengthen as the grass turns green. However, sellers should monitor the weather ahead as pastures across much of the prairies were dry in 2009, and additional moisture this spring will be critical in sustaining the demand for grassers. Heavier cattle will likely be under pressure in the near term as breakevens are reaching higher and the Canadian dollar remains high. A large volume of heavy feeders were available in the first quarter of the year and feedlots filled pens, adding pressure to prices in this class of cattle as we come out of the first quarter.

Non Fed

Seasonally cull cow prices rise in spring as the majority of cows still have calves at side. In the past three years prices have advanced an average 25 per cent during the first quarter. 2010 is following that trend. The three-year average increase from March to May is eight per cent and the market should have no trouble achieving that as cow slaughter is smaller and demand for grinding and trim meats is strong and will remain so as long as the economy struggles to recover. However, much of this demand is based on live and boxed beef exports, which could be hampered by the continuing strength of the Canadian dollar.

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