Processing Capacity Biggest Driver In Cattle Market

May 13, 2020

The biggest driver in the cattle markets right now is getting animals processed.

That from Canfax Senior Analyst Brian Perillat.

"The number one and biggest driver right now is just getting cattle processed," he said. "That's the big bottleneck. Demand and everything seems pretty good. It's just a matter of getting beef put in front of consumers and on the retail shelves at this point.

Perillat says the fed cattle market has been the hardest hit during the COVID-19 shutdowns.

"Two weeks in a row, the smallest kill in Canada we've seen back in over 40 years. Obviously a huge impact there. We had a lot of cattle on feed and cattle backing up. We figure we probably have over 100,000 head of fed cattle here that have been backed up with the plants down or not being able to export or just slow kill."

Perillat notes it will take some time for processors to get back on track.

"It comes down to confidence that as their employees get healthy and they put in huge investments into the plants for social distancing and putting up shields in between people and stuff like that. Once they're more confident that they can ramp up their kills and get a more consistent kill, they might be willing to step out and bid on some cattle. It's going to be a little bit limited in the short term."

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