Beef Market Update: A slow start, but hopeful outlook, for the 2021 beef market

(Kara Oosterhuis/RealAgriculture)

It’s the early days of 2021, but we’re hoping for a great year in the beef markets. Will that be the case?

Anne Wasko of the Gateway Livestock Exchange says although we are are off to a bit of a slow start, the futures market is telling us change is coming. Markets are in what Wasko is calling a “quiet space,” and the feeder market won’t really get going until next week.

When it comes to looking at some of the challenges that could occur this year, COVID-19 is still one of the biggest hurdles to overcome in the beef industry, as the volatility can be so extreme from one day to the next.

“We still have a lot of day-to-day uncertainty. The futures markets are responding to news one day about COVID-19 cases, and then the next day about vaccine rates. So I think you still have to put that as charge number one. Just because from a packing plant perspective — whether we see any further disruptions there or on the food supply side — the whole supply chain can quickly be disrupted,” Wasko explains in our latest Beef Market Update.

As we move further into the spring and into the summer, there’s no doubt the weather and drought conditions — especially the western part of North America — will be top of mind.

“We’re going to be looking at how much it impacts the U.S. cow herd, in terms of whether it moves into some areas that have a lot of cow numbers. We are already expecting a small calf crop, and there was a smaller one in the U.S., and Canada last year too. And again in 2021 — is it even smaller than we are expecting? I think that becomes a more friendly figure as we move into 2021,” says Wasko.

If you placed cattle and didn’t have your feed costs locked in, if the price of feeder cattle doesn’t go down, that could also be a concern this year. From a feeder perspective, the cost of feed could put you in a bit of a bind.

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“It’s going to be an interesting push-me-pull-me kind of market. So we know once we get through this first quarter feeder cattle supplies are going to be smaller, just because the cow herd is smaller. But on the flip side of that, feed grain prices continue to go the other direction,” Wasko explains.

“And as that happens, that of course becomes a factor in trying to push feeder cattle prices lower. It’ll be interesting to see how it all plays out, but at this point in time, where we see barley prices for spring and summer already in Lethbridge, buyers are going to be looking at that one pretty closely because as they go up, obviously how cattle are fed, or what is fed in the feedlot — light cattle versus heavy cattle, cattle staying at grass longer — all those kinds of things could shift in 2021 a little bit in terms of when they get placed on feed, and therefore when they are available for market.”

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