Beef Market Update: Dealing with front-end supply is key to managing basis levels

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It’s no surprise that many cattle feeders are still facing negative margins.

The combination of negative margins and a basis wider than we would like to see have created a question for many, says Anne Wasko of the Gateway Livestock Exchange. From the producers’ perspective, what do we need to do to make this basis more favourable?

Dealing with front-end supply is key, says Wasko.

“We’ve talked a lot about since last fall the drought run. We really saw those feedlot numbers increase quite substantially, and we’re still in that frame,” she explains.

“So April 1 Cattle on Feed, according to CanFax for Alberta and Saskatchewan was still up 10 per cent from last year. At the same time though — give credit where credit is due. Cattle feeders are moving fed cattle every which way they can.”

When looking at cattle marketings — which is slaughter, plus exports — Wasko says cattle feeders have been working extra hard to deal with this extra front-end supply.

“When looking at both pieces of the pie, it looks like we’re going to end up, when the final data comes in, [marketings] could be up close to 9 per cent. So that’s a busy first quarter. Cattle feeders have been selling the heck out of fed cattle. But the storyline is we’ve got to keep doing it to get that front-end up cleaned up, to get that basis firmed up,” says Wasko.

Check out the full conversation between Anne Wasko and RealAg Radio host Shaun Haney, below:

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