Source: Alberta Agriculture and Forestry
Despite challenges in 2022, cattle markets improved, with prices at their highest since 2014-2015.
“2022 proved to be challenging,” says Ann Boyda, livestock economist with the Alberta government. “The livestock sector faced high input prices (including farm labour, feed, and fuel) which raised the cost of production. Dry conditions in spring caused concern but fortunately producers saw some relief by fall that helped address feed supply concerns.”
The livestock sector also encountered border and rail disruptions. These contributed to supply chain challenges and exposed vulnerabilities in the cattle market. Despite these challenges, the cattle markets improved in 2022, with prices at their highest since 2014-2015.
The total Canadian slaughter volume for 2022 was estimated to reach 3.23 million head, up 1% from 2021. However, steer slaughter volume was lower in 2022 by approximately 2.6%, while the rate of beef cows and heifer slaughter was 4% and 5.2% higher, respectively. This would suggest tighter production in 2023.
The estimated average fed steer price in 2022 was 11% higher than the average fed steer price in 2021. Fed steer prices started the year at levels comparable to the 5-year average for 2017 to 2021 but continued a steady increase throughout the year.
The estimated average 550-pound steer price in 2022 was 10% higher than the average feeder steer price in 2021. Light feeder steer prices started the year at levels comparable to the last year average but diverged in the summer and maintained a strong price for the remainder of the year.
At the close of 2022, feedlots in Alberta and Saskatchewan had plenty of fed cattle supply. Fed cattle basis levels were wide and processors had their requirements well taken care of.
“Any further backlog is expected to be alleviated by February, so Alberta fed cattle prices may remain relatively flat through January,” says Boyda. “Basis levels should start to strengthen in February and bids should be stronger in March and April. Feedlot margins are expected to increase, and, in combination with an improved demand for replacement cattle, feeder cattle prices are expected to strengthen over the summer 2023.”
Graph 1. 2023 CME Feeder Cattle Futures
“The future for the feeder cattle market looks optimistic, but it is important to keep in mind that feed prices are still high and profits difficult to sustain for any extended period,” points out Boyda. “Much still rests on what rainfall levels will be like in the spring as soil conditions are still relative dry in many parts of the province. As of December 21, 2022, snow pack accumulation was reported as normal. Hopefully there will be enough snow to recharge surface water supplies but timely spring rains will still be critical.”