WINNIPEG, Manitoba (Reuters) - One of Canada’s biggest cattle feedlots, Alberta-based Western Feedlots, said on Wednesday it will close feeding operations after marketing the cattle it currently owns, due to poor market conditions.
Closure of Western’s feeding operations, likely early in 2017 once its current cattle are sold, will make it more difficult for ranchers to find markets for their young cattle and pinch supplies for Alberta’s big beef packers, Cargill Ltd [CARGIL.UL] and JBS USA Holdings Inc.
Feedlots buy young cattle from ranchers and fatten them to slaughter weight, then they are sold to packers.
Loss of the feedlot “takes out a material portion of demand for cattle across the Prairies,” said livestock industry analyst Kevin Grier. “To me, this is pretty big news.”
Canada is the world’s sixth-largest beef exporter, and Alberta raises more cattle than any other province.
Western, which started in 1958, will continue its farming operations.
Its owners made the decision voluntarily because of the high-risk, low-return environment in cattle ownership, and poor political and economic conditions in Alberta, Western Chief Executive Dave Plett said in an interview.
“Our shareholders see the challenges facing the industry in the next few years are going to be greater,” he said.
Alberta, which last year elected its first left-leaning government in decades, no longer offers an advantage in business climate, Plett said, declining to give specifics.
Many of Western’s 80 staff will eventually be laid off, he said.
Grier said the loss of feedlot capacity is not surprising, given short Canadian supply and the high price of young cattle and the weak price of fed cattle.
Recent Alberta fed cattle prices of C$125 per hundredweight (100 pounds) are down 30 percent from a year ago, he said.
Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by James Dalgleish and Diane Craft