Cattle prices are so good right now that sale values are reaching record numbers for Alberta producers.
The last time cattle prices saw such a large jump was in late 1970s, says Brenna Grant, manager of CanFax research services, a marketing division of the Canadian Cattlemen’s Association. “We’ve never had prices like this.”
“We saw prices in that period (1970s) double and now we’re seeing that again,” she added.
Sale prices at VJV Auction showed large dollar figures as well. On sale day Wednesday, Jan. 14, VJV auction took in 2,329 heads of cattle with big sales figures. Good feeder steers over 1,000 pounds sold from $205 to $225 per 100 pounds. On the lighter end, good feeder steers from 300 to 399 pounds sold for $325 to $360 per 100 pounds.
Compared to Jan. 21 in 2004, the difference is almost staggering; good feeder steers over 1,000 pounds sold for $75 to $81 per 100 pounds and good feeder steers between 300 and 399 pounds sold from $110 to $118 per 100 pounds.
Grant says the beef industry usually goes in cycles of 10 to 12 years and there are peaks and drops in the market during that time. She says that while the market is showing demand in beef, much of it coming from China, producers still have to catch up.
She expects two more years of higher beef production coming down the line. Global demand in beef is even greater. China, which has spent recent years upping its domestic pork and dairy production, cannot keep up with demands for beef and started importing it in 2013.
“Now we’re tight. This is a whole new level of tight supply,” explained Grant.
If producers are in a position to expand, she recommends they consider it but also advises there are inherent risks to expansion. Labour and feed for cattle are something to be looked at before taking the jump to growth as it will affect cash flow.
Grant did say that recent bumper crops have reduced the cost of grain making it an ideal market to sell beef. That, along with low fuel prices is helping reduce input costs.
“For the beef industry and producers it’s been a long time coming,” said Grant.
She expects prices to stay strong but recommends producers pay close attention to the market. “The big risks for production is the volatility (and) where things are going to shape out for 2015.”