Beef Market Update: Heavy cattle, tightening supply, and cautious optimism

This episode of the Beef Market Update is brought to you by Bright Young. Get the mix they love most. Talk to your retailer about Bright Young's forage seed options for a happy, healthy herd. Let's dig in. What's going on in these cattle markets? Here for the Beef Market Update is Ann Wasco, the gateway livestock Exchange. Ann, how are we doing? I'm good, Shaun. Good to be with you. It's already the end of January. Oh my goodness. We're 1 12th through, through the year. What happened this week from a price perspective? Well, as you would expect at this time of the year and especially heading into February, pretty quiet on the B front. Cash markets were quiet as well. Now we still haven't seen a lot of trade in terms of US Fed cattle trade expectations are kind of steady. So for the record, last week our five area live price was 23470 and the dress price 368.80. So there will be trade. Get going. I think later today. You know, packers are running with smaller kills right now. They've got enough inventory. We were a little bit front end loaded. Cattle are heavy, you know, so we're kind of in that treading water range and the wholesale market really identifying kind of the same. Last night it closed pretty much steady with a week ago. 367, 65. And that select is still pretty tight. It's only $7 back. And again, that's pretty typical through this first quarter where you've got a narrow choice select spread. So as I said, harvest levels are small. Packers are losing money. This is pretty, pretty M.O. if you will, for, for what's going on time of year in the conditions we've got out there. Those packer losses, have they been kind of stable at a loss or has it been kind of stable at record numbers? Yeah, you could put it that way. They've been, they, they've been. Because the Fed market's been steady and because the, the wholesale market's been steady, we're kind of, like I say, treading water. And Shaun, as you mentioned at the top of the call, we're heading into February. It's not exactly, that's not beef demand's best time to shine, if you will. I still think, you know, I'm still expecting that as we get into spring, but February is, is what February is. So that's, that's kind of what it is. Just wanted to kind of update listeners on last Friday's U.S. january 1st catalogue feed report. And again, kind of same trend. We saw you know, especially through the second half of last year on feed numbers to start off the year are down 3% compared to last year. This is the smallest January 1st on feed total since 2017. So again, just identifying with that. December placements were down 5% and December marketing's were up 2%. So pretty much as expected as the trade guesses were coming into the report. So that's, that's out of the way. But what we have to. Oh, sorry, go ahead. Well, I was just gonna say. Okay. So based on the fact we have such a low number of cattle on feed that that doesn't, that that ties to, we shouldn't expect a big drop in beef prices at the restaurant or the grocery store and at least in the short term because this supply equation is really not changing in this, in this part of the cycle. No. And we've got such a lag time. Right. So from, from the, it takes a. Long term to turn the ship or. Time to turn the ship. So you know, I think you can, you hate to kind of go out there and stick your, you know, so too far in retail beef prices. But for the first half of this year I just, you know, maybe they've stopped going higher. You know, we'll wait and see when we get a couple more data points out. But it is what it is for a bit. So the other report that's going to come out and help help us understand supply better going into 2026 is the US cattle inventory report for January 1st. So that's due out this afternoon. So we'll wait and we'll talk about, you know, what it actually was. But we always get these pre report guesses ahead of these reports. So in a nutshell, Shaun, not a lot of expectation for, not a lot different than a year ago. So yeah, it certainly looks like the, the cow herd has stopped declining, but the growth looks mild. So the guesses right now, total cattle and calves are expected to be unchanged from a year ago or just up a tad. Beef cow numbers also unchanged. Very mild heifer retention expected in this report at up 2%. So yeah, a little bit like we've all been expecting, but certainly not aggressive. Heifer retention is what we think this report's going to say now. Now just again as a reminder, these inventory reports are not what I'd call market movers. They're not going to move the futures market on Monday morning, I don't think. But what they tend to do is just give us that data series to be able to talk intelligently about here's the state of what's going on in the beef herd size and the state of the numbers. So that's a good confirmation, especially as we're looking at the turn of the cycle, if you will. Yeah. Next week is CattleCon in, in Nashville. What, what do you think we're going to hear out of that meeting? Because that, that's a, you know, over 7,000 typical delegates from across Canada, the U.S. and Mexico. Everybody obviously very focused on, on, on the beef market. What's going to be the discussion, do you think? Well, I think that they'll still be, you know, lots of talk about the unknowns around the Mexican border because that's such a big piece on the supply storey for the US and you know, the border's still closed. It's kind of been quiet on the, on the front lines there for the last little bit. So I suspect, you know, there'll be some discussion around those impacts. There certainly is going to be discussion around demand. I mean 20, 25, as we talked about at the end of the year, Shaun, was just another record year for, for beef demand and that's such a critical piece of the price equation in 26. So I suspect they'll talk a lot about that and the fact that we're, you know, as this meeting's going on next week, we're probably at or near the absolute smallest supplies of this cattle cycle. So you know, where to from here and how fast does that move and, or how does it move? And just given all the unknowns on trade, I do think, you know, tariffs and trade are going to be, have to be part of that discussion next week. So it'll be very interesting to be, to be, be part of that meeting or listening to see what comes out of the meeting. Yeah. And if you're a rancher and provided you have moisture, that's a bit of a caveat here. But if you have moisture, you wish you could snap your fingers and all of a sudden have double, double the, the herd size on your ranch because there's a lot of profit out there for, for that kind of inventory. But to get like, to get to that, it's a time equation when it comes to the beef business. These are long term decisions for the rancher for sure. And we've talked about all of, and it's not just weather and price, but there's, there's so many other pieces to those decisions. Before, before we go, Shaun, I did want to circle around back to the local market. We haven't talked about that and we did get a couple bucks more for fed cattle prices in Alberta this week. Draught market was up $2 to $5.10 delivered. The Ontario market was steady this week at 5:30, so wanted to get that out of the way. We also had a stat scan report yesterday on the November live cattle exports. So we'll just update you there. November fed cattle exports were up 4%. So it was a busy month. Fed cattle moving south if you will for harvest year to date that number's up six. So we kind of been running up on fed cattle exports all year. Cow Exports were up 25% and that's not a surprise because we had one packer in Canada kind of back off on their cow cal in that fourth quarter. And so it shows up in those fed or in those cow exports. So year to date we're still down 8% but it was a busy month for cow export South November feeder cattle exports. Tiny, tiny, tiny. Only 5,000 head. So that was down 24% from last year. And I was going to do a little plug for livestock price insurance in Canada if that's appropriate. Okay. So just looking at the calendar, things happen quickly. We're going to flip into February next week and that's when the, the calf product insurance starts to sell to cover your fall 20, 26 calf price. So you know, have a look, just a reminder that oh, that's next week. So again I think, you know, February 3rd the product comes up for sale for calves. I mean fed cattle and feeder cattle are, you know, for sale year round but this feeder product seasonal. So you know, get back on the email list if you aren't, have a look at what those, those strike levels are at and what the premium costs are going to be and think about it because we've talked lots about volatility. I don't think we're out of the woods there. And so this may be, this may be something to take a look at. Yeah, also the agri stability point. We've heard from guests on our show here from M and P talking about how from a rancher perspective this is a year where really should look at agristability. It's something where ranchers have really pushed back in the past, markets changed and something you should need to be talking to your account about. Hey, can I, I've got a, an audience question before we go. So last show we were talking about the amount of feeder cattle imports in from, from the US into Canada. Okay. So US feeder exports into Canada and we're going to break a record this year. And whether we hit that half million, we're going to have to wait to see the prior. The prior record 2024 was 400. So a significant amount has crossed from the US into Canada. Do we have any idea on the makeup of those? And so I don't have the question in front of me, but one of our audience members heard the Beef Market Update and asked how many of those are like little dairy calves, you know, or the beef on dairy movement? And how many of those are, you know, more, you know, traditional feeder cattle? I don't know the best way to separate those two, but that was a question from the audience. Any idea? Yeah, we. That's. That's not tracked in terms of, you know, what classic cattle. We just know they're going into restricted fe. But from a seasonal perspective, in the fall run there's certainly. So that would have been October's number, and the upcoming number in November would include conventional beef calves in the fall run for the 12 months of the year. I think there's a pretty static kind of beef on dairy number that does tend to move north and we've seen it pretty steady. And then in the fall run, we get a much bigger number because you're including the conventional calves. So depends on the time of year, that October number that we reported about a couple calls ago would certainly have included some of both. Great stuff and thanks a lot. Really appreciate it. Have yourself a great weekend and we'll talk to you in a couple weeks. Okay, thanks. You too. Shaun. Thank you for downloading this episode of the Beef Market Update, brought to you by Bright Young cheque out their silage and grazing corn stock blends or custom build your own mix for a happy, healthy herd. Talk to your retailer today.