WINNIPEG (B)--Canadian feeder and butcher cattle prices are higher than they've been in the last 25 years, according to Rick Wright, manager of Heartland Livestock Services in Brandon, Manitoba.
Wright said there were several reasons for the increase in price, including higher beef consumption in Canada and continued strong demand in the United States, a lower number of cattle being produced and a decrease in grain prices.
According to Statistics Canada, Canadian beef consumption increased to 49.82 pounds per capita in 1999, up from 49.38 pounds in 1998.
While no data for the year 2000 has been released, a spokeswoman for the Beef Information Centre (BIF) said they are projecting a strong demand for beef this year. BIF represents 100,000 cattle producers across Canada and its mandate is to increase beef and beef product sales within Canada.
Wright said Canadian retailers and wholesalers claimed increases of 6% to 8% in beef sales, adding that some may even be seeing bigger increases.
U.S. consumption of beef has also helped to push up the price of Canadian cattle, as most of Canada's exports go to the United States, according to the Canadian Beef Export Federation (CBEF).
"For us in Manitoba, probably 70% of our butcher cattle find their way into the U.S.," said Wright.
U.S. beef consumption was forecast to remain at 69.0 pounds per capita in 2000, the same level reported in 1999, according to the U.S. Department of Agriculture. This is up from the 1998 level of 68.1 pounds per capita.
Fewer cattle are being produced in Canada this year, according to Wright, who added that cattle output is at the low of a 10-year cycle right now.
A typical cattle cycle in North America occurs every nine to 11 years, according to the Canadian Beef Export Federation. Canadian cattle population peaked in 1996 at 13.4 million head, causing a decline in prices.
The federation noted that Canadian producers are beginning to keep more female cattle in their breeding herds, which will decrease the supply of cattle for feedlots and beef processors for approximately three years. As supplies decrease, cattle and beef prices are expected to increase.
Lower grain prices have also been a bullish factor for cattle prices, Wright said. When grain prices go up, the price of cattle goes down, he explained, adding that right now, feeder cattle producers are cashing in on a very abundant supply of reasonably priced feed.
"It's the grain that drives the cattle, not the cattle that drives the grain," he said.
Wright said prices for a 600 pound steer currently range from $1.40 to 1.50 per pound (Canadian, 94 cents to $1.01 U.S.), which compares with $1.20 to 1.30 (81 to 88 cents U.S.) per pound last year at this time. An 800 pound steer now ranges between $1.20 to $1.30 (81 to 88 cents U.S.) per pound, compared to the 1999 level of $1.15 to $1.25 (77 to 84 cents U.S.) per pound. Butcher steers are currently priced between 90 to 95 cents (61 to 64 cents U.S.) per pound, up from last year's price range of 82 to 85 cents (55 to 57 cents U.S.).
Other factors pushing up the price of cattle are a weaker Canadian dollar and an increase in the price of competitive meats like pork, Wright said.
The weaker Canadian dollar gives producers exporting feeder and butcher cattle into the U.S. an attractive exchange rate, he explained.