Multiple factors are supporting prices, a commodity analyst said
By Diego Flammini
Despite the drought situation across parts of Western Canada, cattle markets are in good shape.
“Feeder cattle futures on the continuous daily chart are higher by about 19 per cent since the start of the year,” said Abhinesh Gopal, a commodity analyst with Farms.com Risk Management. “And prices are up almost 55 per cent since the April 2020 lows brought on by COVID-19.”
Futures are also on an uptrend holding above the 100-day moving average, Gopal added.
Multiple demand factors are contributing to the strong prices.
Domestic and international demand in particular, Gopal said.
“Restaurants are continuing to open,” he said. “Retail demand has always been strong since the onset of COVID. Summer grilling season is in full swing as well, but that normally slows as fall approaches.”
China has also been purchasing high volumes of beef.
As of this March, China has imported 623,947 MT of beef. This represents a growth rate of about 20 per cent.
Canada’s share of the Chinese market is 3,594 MT, data from Chinese customs data shows.
Cattle prices could decrease in the coming months depending on how the drought plays out.
Producers are selling cattle before they’re usually ready to do so, Gopal said.
“Many producers are selling their cattle more than two months ahead of time due to the drought and lack of pastures,” he said. “They cannot afford to feed the cattle because feeding costs are high due to strong grain prices, which will eat into producer profitability.”