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Deb’s Outlook – for Feb. 9, 2009

Fed Cattle

It’s hoped that the increased flexibility in the COOL final rule will lead to more competition for domestic cattle from U. S. plants as packers will have an easier time managing product labels under these new regulations. However, the fed supply in January is expected to increase due to an increase in the number of cattle placed against the first quarter as well as the delayed marketings caused by the December cold snap across the Prairies. If U. S. buyers decide to limit their purchases local packers could pressure the market lower.

March will likely see a seasonal uptrend as numbers begin to lighten and spring beef demand comes into play. However, watch for shifts in consumer spending and financial markets. Changing economic trends will weigh heavily on demand and the market fundaments in the pricing of fed cattle in the coming months.

Feeder Cattle

As we head into 2009 there are several positive factors for the Canadian feeder cattle market. First, a more flexible rule on COOL for the slaughter of Canadian cattle should increase competition from U. S. buyers. Secondly the Canadian dollar remains under pressure offering the potential for increased exports. Lower grain prices are another positive; as is the growing number of empty pens in feedlots as yearling cattle head to slaughter. The lower Canadian dollar coupled with returning interest from U. S. buyers should tighten the feeder basis. While there are many positive fundamentals we’ll still have to be very aware of economic issues that are influencing beef demand and commodity prices overall in 2009.

Cull Cattle

Demand should remain strong in the coming months for cull cows and bulls. While slaughter cow numbers are expected to remain relatively large through 2009, volumes will likely decline as spring calving dates approach. Seasonally cow prices generally increase through the spring to reach the annual highs in the early summer as most cows are out to grass with calves at side and grinding meat demands are high for grilling season.

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