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Beef Market Update: Strong Canadian basis a positive story in the face of rising feed costs

By: RealAgriculture Livestock Team

April 30, 2021

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This cattle market is something right now, to say the least.

Demand has been fantastic — exports are strong, and domestic consumption is there, and yet it’s not making its way back to the primary producer in terms of pricing, creating a frustrating situation for feeders.

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Anne Wasko of the Gateway Livestock Exchange says that sentiment is valid as we head into the May.

“Again, this week, the U.S. choice cutout is up $11.5 from last week, so $294 last night on the choice. It’s crazy. So again, restaurants — especially south of the border, as restrictions get lifted — we can still see that in-buying happening. They are busy pulling from the retailer that was busy selling beef prior to this. But, U.S. cash [cattle] prices were down a buck to $2 this week in Texas,” she explains. “So it’s not just a low cost scenario frustration for cattle feeders.”

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With Lethbridge barley hitting a new high this week, and a strong loonie, it’s easy to rattle off the challenges facing cattle feeders, but the strong local basis is a positive story. Wasko says it’s the whole combination of the U.S. price being down, Alberta prices being up on strong slaughter levels, and yes, the Canadian dollar being over 81 cents.

“Certainly even the processors in Canada and Western Canada in particular are running at extremely solid levels for these young cattle. For steers and heifers, slaughter continues to be outstanding,” Wasko says. “So even prior to the implications of year over year changes of COVID-19, our slaughter is up, working lots of overtime, and whatnot. So demand to process these cattle obviously is strong.”

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Check out the full conversation between Shaun Haney and Anne Wasko, below: