Feed weekly outlook: Rising costs cut into cattle profits

(Photo courtesy Canada Beef Inc.)
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MarketsFarm — Strong demand for beef has kept fed cattle prices in Western Canada well supported, but high feed grain prices continue to cut into profits in the feeder sector, according to CanFax analyst Brian Perillat.

Fed cattle prices have rallied for most of 2021, he said, “so feedlots, after losing money for two to three years, are making money… which supports the overall market.”

Feeder cattle prices have also shown some strength, but not nearly as much as the grain markets, he added. Barley remains expensive in the Prairies, with corn imports from the U.S. also trading at very high levels.

“Grain prices have taken a bite out of calf prices,” Perillat said, adding “the guys feeding cattle are maybe squeaking out a bit of profit.”

Prairie weather conditions and their impact on grain and forage production will be followed closely over the next few months.

Perillat expected strong beef demand and tightening North American cattle numbers left room to the upside in the cattle markets, but he added that high feed prices could temper the advances.

— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.

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