2021 Cattle and hog sectors outlook update: Hope for a strong end to the year amid high costs

Our February forecasts provided livestock prices that have each been exceeded to date. Year-over-year (YoY) prices all show improvement (Table 1). Both cattle and hog prices in Eastern Canada are now above the five-year average. Western cattle are challenged to meet their five-year average in 2021, but year-to-date data show prices have generally risen since 2020.

Hog prices forecasted for the remainder of the outlook period are mostly expected to be lower than year-to-date levels. Average cattle prices for the rest of 2021 are largely consistent with the year-to-date average.

Those prices have played into a year of tight cow-calf margins in Western Canada. So have feed costs that were high in the summer and that continue to rise. Across much of the West, drought has negatively impacted pasture conditions, feed supply and water availability, challenging feedlot profitability. Cow-calf margins in eastern Canada are expected to be better given good growing conditions.

Feed ratios out of step with 5-year averages

The forecasted cattle-to-barley ratio for 2021 has fallen 24.8% YoY and 44.7% against the five-year average (Table 1). The hog-to-corn ratio has also deteriorated, falling 21.3% YoY and 27.2% against the five-year average.

Most Canadian imports of U.S. corn are going to the West, where feedlots are facing barley costs projected for the year to be 42.9% higher YoY and 59.1% higher than the five-year average. Corn prices are no better. They’re also forecasted to be 42.9% higher YoY and 53.8% higher than the five-year average. That has generated a significant difference in Western and Eastern livestock-to-feed ratios (Figure 1), calculated as the number of bushels of Number 1 feed barley or corn equal in value to 100 lbs. of index live hog.