This year was shaping up as a pretty decent year for fall calf prices until coronavirus panicked markets.
“Fundamentals don’t matter so much when we’re in this kind of panic state of mind,” market analyst Brian Perillat told a Celebrating Rural Ranching Women conference in Moose Jaw.
“Overall in the last few years, we’ve seen phenomenal beef demand.”
Beef consumption increased in the face of higher prices. Canada’s cattle herd continued to decline, a herd expansion in the United States has stalled and exports are strong.
Those factors all point to strong prices in the fall when last year’s large U.S. calf crop has worked its way through the system.
Canadian beef exports reached a record $3.2 billon last year adding almost a billion dollars in four years.
“Last year we exported 10 per cent more beef but had 17 per cent more value. Prices are going up faster than volume. Usually bigger supply means lower prices,” he said.
“It’s been a little bit hairy for the last month,” said the Canfax analyst. “We certainly can’t be immune to all these other factors.”
Coronavirus hit equity markets, cattle markets and commodity markets.
“We’ve seen a pretty big drop in cattle futures” mostly for calves but he remains optimistic.
“If you’re on the ranching side of things hopefully most of these things can blow over by fall.”
Feedlots, which made $150 to $200 a head in December have experienced $200 a head fed cattle price declines, much caused by the coronavirus scare.
Canada is “pretty vulnerable to the market. We’re geared up to export a lot of meat and if we can’t export then that changes the picture a lot.”
Global beef demand is strong as the middle class evolves and grows in China, the Middle East and Africa.
The impact of African Swine Fever can propel beef prices, having wiped out between 40 per cent to 60 per cent of pigs in China.
“There’s not enough meat trade in the world to actually fill that gap.”
The coronavirus shut down much of China leading to loss of poultry when feed was unavailable.
Australia, one of Canada’s beef export competitors for the Asian market, will have little beef to export. Years of drought and recent fires cut beef supply 15 to 20 per cent.
The U.S. opening a quota for Brazilian beef may offset lower imports from Australia.
Perillat said Beyond Meat plant-based meat is a small market with yet unproven success.
“There is room for both of us.”
Ron Walter can be reached at ronjoy@sasktel.net
