Grasser market reaches new highs

Cow-calf pairs and yearling grassers are working away, turning marginal land and perennial grasses into high-value food for Canadian consumers. Now that calving and planting are in the rear-view mirror, talk has turned to expectations for the calf and feeder market this fall.

The Canadian beef cow herd as of January 1 is down 2.5 per cent from last year, heifers kept for breeding are down a significant 4.3 per cent, and calves under one year old are down 3.9 per cent. This will keep Canadian supplies of feeder cattle tight this fall and force feedlot operators to rely on feeder imports to fill pen space. However, the U.S. beef herd is also shrinking with beef cow inventories on January 1 down 3.6 per cent and breeding heifers down 5.8 per cent. The U.S. calf crop in 2022 is down 2 per cent.

The Alberta feeder market has been strong as market signals continue to indicate tighter cattle and beef supplies moving forward. Yearling grasser operations are aggressively procuring cattle that will be market ready in the fourth quarter of 2023 and the first quarter of 2024. Alberta feeder steers in April were 10 per cent higher on average than in January. The largest price increases were for the 5-600 lb and 6-700 lb weight classes, up 11 per cent and 15 per cent respectively, with both weight classes of steers putting in new all-time high prices in April. Heifers followed suit, up 17 per cent on average between January and April. Like their steer counterparts, the largest percentage price increases were on heifers suitable for grass; 5-600 lb heifers were up 21 per cent and 6-700 lb heifers were up 22 per cent. Any softening in the feed grain prices will support the feeder market in the second half of the year.

The non-fed slaughter market continues to trend stronger for both cull cows and bulls. Alberta D2 cows began their surge in January and maintained that momentum right through April. Averaging $137/cwt, D2 cow prices in April were 39 per cent higher than January. As of the first week of May they shot up again; at $150/cwt they are only $1/cwt shy of their all-time highs set in April 2015. Cull cows typically put in their spring highs near the end of May, when demand for ground beef for summer grilling is highest. As concerns about recession heat up, demand for ground beef is expected to be strong. It wouldn’t be surprising to see D2 cow prices overtake their previous highs later this spring before moving sideways to soften through the summer. The slaughter bull market trended sideways in January and February, then caught fire, averaging $155/cwt in April, up 25 per cent from January.

While tight supplies are guaranteed, the big question is how consumer demand will hold up in the face of inflation and potential recession.

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This article was first published in Volume 3 Issue 2 of ABP Magazine (June 2023). Watch for more digital content from the magazine on ABP Daily.