There are plenty of flashing warning lights in Farm Credit Canada’s (FCC) latest outlook for the cattle and hog sectors.
While prices are strong and expected to stay that way for a while, the two “could take a big step backwards, especially from the highs of 2021 – and it may be more a question of ‘when’ not ‘if,’” analyst Martha Roberts said in the lender’s most recent quarterly report.
FCC’s points to the back-up in feedlots because slaughter plants are not “working to capacity as packers face challenges to move the beef along” (despite the low dollar) and warns about “demand destruction.”
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While North American demand for red meat is high, that may not be enough.
“As the world economy continues to decline and export markets respond to weaker conditions, more pressure could be applied to prices,” Roberts warned.
