Beef Market Update: Set-aside program begins, futures climb, and slaughter numbers impress
This week’s Beef Market Update might be the most positive report we’ve posted in three very long months.
In this week’s episode, Anne Wasko of the Gateway Livestock Exchange joins Shaun Haney to catch up on the early summer numbers ahead of a holiday weekend.
To start off in the green, Canadian slaughter data for the last week of June was 66,580 — an 8 per cent increase from a year ago. “If we look at fed cattle specifically, that number is 60,300, up 15 per cent year-over-year,” Wasko says. Let’s give credit where credit is due here, as these are abattoirs that faced significant challenges and shut downs just two months ago and are now working very hard making up for it.
“We’re chipping in to that backlog,” she says. You can’t clean it up overnight, but we can get through the backlog more quickly with these kinds of numbers. To that end, Alberta is back up and running full tilt and now accounts for 81 per cent of national slaughter.
The backlog still exists, of course, and ranchers and feedlot operators in Alberta and Saskatchewan can enrol in the federal set-aside program beginning this week and next, so contact your provincial organizations to get that going.
Looking to the U.S., last week’s kill was 680,000 head, a very impressive number.
Also to the good, Canada’s prices were moving higher this week, as weights come back in line and the value chain gets more current. The weekly average wasn’t set yet as of recording, but it did look like live cattle prices would average about $3/higher than last week. U.S. will likely be down to $94, and that means the spot basis could be close to par, which is a heck of a basis to start off July, Wasko says. A more average basis for this time of year would be three to four dollars under.
This week is a big celebration week with both Canada Day and Independence Day, and that does good things for BBQ demand and protein demand in general, but the holidays aren’t just a blip, Wasko says.
In looking to the live cattle futures market, it’s trying to gauge demand looking ahead and the numbers suggest a supportive/optimistic trend to demand, as August live was $99.40, October was approaching $103, and December was $106.
Cut-out values are also back into the good-value range, and signal a return to a more normal price gap between the proteins, which both consumers and retailers will likely appreciate as retail prices come down.
Listen below for more analysis, via Anne Wasko, here: