The cattle market in southern Saskatchewan weathered more than one storm in 2016. Falling prices, Bovine TB and the closure of one of the biggest feed lots in Alberta were challenges for Canadian beef producers.
First, Canadian cattle market prices in 2016 continued to fall after peaking at an all-time high in 2014 and early 2015. Prices at the livestock auctions in Assiniboia and Mankota reflected this trend. They began their decline about September 2015 due to a constellation of factors. Brad Marceniuk, Provincial Livestock Economist in the Ministry of Agriculture, explained that U.S. cattle stocks hit a critical low in 2014 that pushed up Canadian prices in 2014 and 2015.
The Saskatchewan average for feeder steers from 2005 to 2013 was just above the $125 per cwt range. Prices climbed steadily over 2014 to almost triple previous prices near $350 per cwt. But by September 2015, U.S. herds began to recover and prices steadily fell. In early July 2016 they reached just above $200 per cwt on average. Marceniuk noted that although prices are coming down, they are still higher than they were before 2014. Prices ended 2016 still higher than pre-peak markets.
In December the provincial average for feeder steers 300 to 400 lbs. was $227.75 per cwt, those 400 to 500 lbs. averaged $211.60 per cwt, 500 to 600 lb. steers averaged $191.70 per cwt, 600 to 700 lb. steers averaged $180.40 per cwt, those 700 to 800 lbs. averaged $170.25 per cwt and 800 -900 lb. steers averaged $162.96 per cwt.
At the Assiniboia Livestock Auction both cattle numbers and prices reflected market trends over 2016. The ALA saw brisk sales throughout the year with 56,496 head sold during 2016, while Mankota saw 21,307 head sold in the nine months of reported trading.
At the ALA, feeder steers began the year with all weight categories selling in early January from a low of $2.00 per lb. average for steers over 900 lbs. up to a high of $2.98 per lb. average for those in the 400-499 lb. range. By the end of the year at the last sale in December steer calves weighing 300 to 399 lbs. averaged $2.07 per lb., dropping from the start of the year an average $0.88 per lb. Those weighing 400 to 449 lbs. ended the year at an average $1.98 per lb. down $1.00 per lb. Those in the 450 to 499 lb. weight category sold in December on average for $1.97 per lb., dipping $0.12 per lb. over 12 months.
Steers weighing 500 to 549 lbs. dropped $0.86 over the year since January, ending the year at an average $1.89 per lb. Steers in the 550 to 599 lb. weight category ended the year at an average $1.85 per lb. that was down $0.73 per lb. since January. Those weighing 600 to 649 lbs. sold for an average of $1.78 per lb. in December, falling $0.63 per lb. since January. The 650 to 699 lb. steers lost an average $0.62 per lb. over 12 months finishing in December at an average $1.73 per lb. Steer calves at 700 to 799 lbs. lost $0.46 per lb. over the year ending 2016 at an average $1.66 per lb. The 800 to 899 lb. steers averaged $1.51 per lb. by the end of the year down an average $0.65 per lb. Steers over 900 lbs. ended the year at an average $1.43 per lb. losing $0.57 per lb. on average since January.
Feeder heifers also followed the market dropping in price over 2016. Heifer calves weighing 300 to 399 lbs. by the end of December fell $0.84 per lb. to an average $1.80 per lb. Those weighing 400 to 449 lbs. $0.79 per lb. ending the year at an average $1.77 per lb. The 450 to 499 lb. heifers in December averaged $1.61 per lb., dipping $0.81 per lb. from the start of the year. Heifers weighing 500 to 549 lbs. sold for an average $1.63 per lb. in December and falling $0.65 per lb. over the year. Those 550 to 599 lbs. finished the year down $0.62 per lb. to an average $1.55 per lb., while those weighing 600 to 649 lbs. sold for an average $1.53 per lb. in December down $0.52 per lb. from January. The 650 to 699 lb. heifers averaged $1.46 per lb. by the end of the year which was a $0.52 per lb. drop over 12 months. Heifers 700 to 799 lbs. reached an average $1.43 per lb. down $0.51 per lb. since January.
The ALA’s regular cull cow and slaughter bull sales also saw declining prices. Heifers were selling in January 2016 between $1.15 to $1.55 per lb. peaking in July at $1.22 to $1.34 per lb., but dipping to between $1.00 and $1.43 per lb. by the last sale in December. D1 and D2 cows ended the year in December selling between $0.85 to $0.99 per lb. which is a slight dip below the $0.90 to $1.09 starting the year. Notably, prices crested mid-year. D3 cows finished the year between $0.67 and $0.84 per lb., remaining in range of their January price of $0.65 to $0.85 per lb. Canner cows remained a stable $0.10 and $0.60 per lb. throughout the year, peaking on $0.05 higher in summer 2016. Slaughter bulls sold from $0.87 up to $1.10 per lb. in December which was a drop of $0.13 to $0.25 per lb. since January. Their prices rose May through September and peaked at the end of August, but have been on the decline since October.
The second half of 2016 brought unwelcome news to the cattle industry. The Canadian Food Inspection Agency launched an investigation of ranches in southern Alberta and southwest Saskatchewan when a cow from Alberta was slaughtered in the U.S. and determined to have Bovine Tuberculosis back in September. As of the last update from CFIA on January 5, six animals have tested positive for Bovine TB, including the original cow. They all trace from one infected herd. The CFIA has placed 50 premises under quarantine that includes 26,000 head. Alberta has been the hardest hit and that province’s government has labelled the situation “a disaster”.
In Saskatchewan, the areas under investigation take in the RMs south of the South Saskatchewan River and west of Highway 4. Saskatchewan has five premises under quarantine involving about 4,000 animals. Saskatchewan has had less of an impact because there are more marketing options for the province’s cattle. According to the Saskatchewan Stock Grower’s Association, trading partners haven’t shut their doors to Canadian beef as feared when the cases first appeared.
“There is no direct impact on the market,” said Chad McPherson of the Saskatchewan Stock Growers Association stated. In fact, beef futures prices in the U.S. are driving prices back up, he added. An analysis of trading at the ALA and Mankota livestock auctions support this view. There have been no sharp spikes in either the numbers of cattle marketed or in their prices. Prices continue their gentle decline since the high peak of late 2014 to 2015.
Another worry for the markets came when Western Feedlots in Alberta announced it was winding down operations. Initial expectations were that the market would be hit hard, but a market analysis indicated that Saskatchewan prices and trading were not significantly impacted by the closure. Also, consumer choices have been influencing the markets in the past two years. The high cost of beef in stores peaked in 2014 and 2015. They began to decline when consumers looked elsewhere for more cost-effective protein sources like pork and chicken reaching the market in the past year, Marceniuk added.
Meanwhile, Canadian beef sees bright prospects on global markets. The falling Canadian dollar makes Canadian beef more competitive. Although the Russian market remains closed due to sanctions, large markets have opened in the Far East. China lifted its beef import ban of Canadian beef in 2015.
Nevertheless, Saskatchewan’s beef industry had been holding its own in 2016. Beef production for mid-December 2016 was estimated at 505.0 million lb. Although this figure dropped from the previous week, it represents a gain of 2.8 per cent from 2015. An estimated 599,000 head were slaughtered in mid-December in Saskatchewan, up 2.2 per cent from the same week in 2015.
